Have You Claimed All Your Capital Allowances?

Have you claimed all your capital allowances?

Identifying capital allowances can add significantly to cashflow benefits for profitable businesses. Draft legislation has been issued announcing changes to the process for claiming capital allowances on fixtures that, if implemented, will significantly increase compliance pressure on property transactions from April 2012. Property investors should be reviewing now the capital allowance attributes of their properties and compliance processes around renovations and improvements, as a matter of priority.

Who can claim and how does the process work?

Any company or business that has purchased property as a fixed asset may be eligible. The capital allowance regime allows for tax relief on certain capital expenditure. There is also an opportunity to make claims for capital allowances in respect of a category of expenditure called 'integral features' of a building. Integral features include electrical systems and cold water systems and have wide application. Claims cannot be made for residential property, though common parts of such properties may qualify.

For properties purchased by a company on or after 1 April 2008 (or 6 April 2008 for an unincorporated business) and which were owned by the seller prior to those dates, the seller was unable to claim capital allowances on certain categories of what are now integral features. Consequently it is open to the purchaser to...