Embedded Capital Allowances
Claim tax relief & cash rebates from HMRC
Many business owners and accountants are not aware that there are tax allowances available for items “embedded” within a property. These are known as Embedded Capital Allowances and can be claimed only by submitting a special form in an HMRC approved format. When selling commercial properties, these allowances must be claimed in advance as they cannot be claimed retrospectively.
Accountants who work with clients who own or intend to invest in commercial properties, will be familiar with capital allowances for commercial properties as well as embedded capital allowances. However, due to changes introduced in 2008, 2012 and 2014, Embedded Capital Allowances have become a specialist area, requiring the services of capital allowance experts.
CapEx consultants can help you claim Embedded Capital Allowances by assisting with detailed knowledge of statute and case law. Conveniently located in the West Midlands, our tax specialists can assist local and national businesses, as well as sole traders.
What are Embedded Capital Items?
Embedded items are all fixed parts of the property, which can include bathroom facilities, lifts, lighting fixtures and electrical items like heaters or air conditioning.
It is key to understand that capital allowance claims are not just the figures in the accounts for ‘fixtures and fittings’, as these won’t include ‘additions to property’ (such as the ones listed above).
Claim up to 20% of a building's purchase cost
To claim back the maximum amount, all fixed parts of the property will have to be included when submitting a claim.
For commercial and industrial properties, as much as 15 to 20% of the building’s purchase cost can be claimed as an embedded capital allowance.
Who can claim Embedded Capital Allowances?
Any business property owner can qualify for Embedded Capital Allowances tax relief, so long as they meet the following conditions:
The property is owned by someone with a connection to the company, who is a UK taxpayer.
The property should be Freehold, not Leasehold
The property should not be owned by a pension fund or any other entity exempt of or not paying tax.
Claiming Embedded Capital Allowances
Business owners can claim these allowances at any time. If the property is due to be sold, then a claim should be submitted as soon as possible. Claims cannot be submitted in retrospect, meaning that you won’t get a tax refund.
For properties bought before April 2020, there is no time limit on submitting a claim. However, for properties bought or built after April, there is a time limit in place to start and complete the claim process.
We can help you reclaim the tax you are entitled to
CapEx Associates can help you claim your allowance on business property, as well as any plant and machinery relief you may qualify for. If you’ve just bought a property and you overpaid Stamp Duty Land Tax, our chartered tax consultants and surveyors are ready to also assist you in claiming an SDLT refund.
Get in touch today to find out more or visit us in our Solihull office.