Embedded Capital Allowances
Many business owners and accountants are not aware that there are tax allowances due on items “embedded” within the property. These are known as Embedded Capital Allowances and can be claimed only by submitting a special form in a format accepted by HMRC. Where a commercial property is due to be sold, it is really important to claim embedded capital allowances in advance, as they cannot be claimed back in retrospect, following the sale.
Accountants who work with clients who own or intend to invest in commercial properties of any kind will inevitably come across capital allowances for commercial properties and embedded capital allowances. However, due to changes introduced in 2008, 2012 and in 2014, Embedded Capital Allowances have become a specialist topic, requiring the services of Capital Allowances specialists.
CapEx’s capital allowances consultants can help you claim Embedded Capital Allowances by assisting with detailed knowledge of statute and case law. Conveniently located in Solihull, in the heart of the West Midlands, our tax specialists can assist local and national businesses, as well as sole traders. Our high level of expertise will help break down the qualifying and non-qualifying elements of your commercial property and claim maximum tax relief.
What are Embedded Capital Items?
Embedded capital items are considered to be all fixed parts of the property, which can include bathroom facilities, lifts, lighting fixtures and electrical items amongst others. It is key to understand that capital allowances 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).
In order to claim back the maximum amount of tax for the business, all fixed parts of the property will have to be included when submitting an embedded capital allowances claim.For commercial and industrial properties, as much as 15 to 20% of the building’s purchase cost can be claimed as embedded capital allowances.
Who Can Claim Embedded Capital Allowances?
Any business property owner can claim Embedded Capital Allowances, as long as the property is owned by someone with a connection to the company, who is a UK taxpayer. The property should be Freehold, not Leasehold and not owned by a pension fund or any other entity exempt of or not paying tax.
Claiming Embedded Capital Allowances
Business owners can claim Embedded Capital Allowances at any time. If the property is due to be sold, then Embedded Capital Allowances should be claimed as soon as possible, as these can’t be claimed in retrospect.
For properties bought before April 2020, there is no time limit to claiming Embedded Capital Allowances. However, a new set of rules applies for properties bought or built following April, which includes a time limit.
CapEx Associates consultants can help you claim Embedded Capital Allowances on business property. Get in touch today to find out more or visit us in our Solihull office. We can help both local and national businesses as well as sole traders to claim all the tax they are entitled to.