Capital Allowances – What are they?

A Government tax incentive / relief which can be deducted from your corporation or income tax bill on property-related expenditure.

 

What is the benefit to me?

For every £50,000 of qualifying Capital Allowances the following tax savings can be achieved:

Company paying 19% corporation tax:                    £9,500

Partnership / Individual paying 45% income tax:    £22,500

For two years from 1 January 2019 the amount of tax relief available to write off in the year of expenditure is temporarily increased, significantly improving cash flows, so consideration should be given to timing of planned expenditure.

 

What things qualify for Capital Allowances?

When fitting out your premises there are a number of things that attract tax relief, including heating, lighting, electrics, security, IT, carpets, furniture, racking, shelving, machinery, cranes, trade related installations, and from 29 October 2018, mezzanines, floors, ceilings and walls.

 

My accountant will probably cover this?

Accountants will claim Capital Allowances on loose machinery. However, fixtures inherent within a building fit-out are more difficult to identify, subject to case law and require a specialist chartered surveyor to value.

Additionally, various ancillary costs which can attract tax relief are often missed by accountants due to the specialist nature of the legislation.

 

What steps do I need to take to benefit from the tax relief?

If planning fit-out or refurbishment works within your property, contact Veritas Advisory for an initial free desktop estimate of allowances, including potential tax savings.

I have already carried out the works. Is it too late to claim?

No, there is no time restriction to review historic expenditure, so even if works were carried out five years ago and no Capital Allowances have been claimed, you are still entitled to submit a claim now on that expenditure.