Osmai Management
Embedded Capital Allowances
The majority of business owners are not aware that there may be allowances “embedded” within the fabric of their commercial properties that could give rise to a benefit totaling 25% of the value of the property. For a commercial property worth £1 million, this could rise to a previously untapped benefit of £150,000.
The Capital Allowances system allows a business to write off the cost of certain capital assets against taxable income. This is well known, and allowances for Property, Plant and Equipment (PPE) are commonly claimed. The majority of business owners are not aware that there may be allowances “embedded” within their commercial buildings that could give rise to a benefit totalling 25% of the value of the property.
Embedded Allowances include items that are attached to or embedded in the property, and may have been in the building when it was purchased. They are integral features, such as entry and exit systems, doors, shutters, bathroom facilities, etc. Embedded Allowances are commonly found in hotels, guest houses, holiday lets, care homes, dentists and veterinary surgeries. Office and retail premises, industrial units, and warehouses can also hold worthwhile Embedded Capital Allowances if the buildings are of a reasonable value.
For a commercial property worth £1 million, this could rise to a previously untapped benefit of £150,000. What would that mean to you and your business?
The system for claiming Embedded Capital Allowances is as technical as it is complicated. We use partners with deep experience in the sector to manage and process claims so that you can concentrate on your business.
The process is straightforward and usually runs as follows:
- A short meeting with a consultant to gather information about your business and your commercial property and to talk you through the process.
- Contact is then made with your accountant and the required information regarding the property to establish whether there is a basis for a claim is requested.
- Once this has been established, a surveyor is sent to your property to gather detailed information that will enable a specialist tax accountant to produce and submit a detailed report to HMRC outlining the nature and level of a claim.
- If HMRC agrees with the claim, they will make a payment. A fee is only charged if the claim is successful.
You may think that your accountant should be able to assist you but, in most cases, this is not a reasonable expectation. It is a deeply technical process and requires a high level of understanding of what can be claimed and what HMRC requires.
If you would like to arrange a no-obligation consultation with a consultant, please contact us via the contact page.
The Small Print
- “Embedded” items are items considered to be integral to the property, such as entry and exit systems, doors, shutters, bathroom facilities, etc.
- Any owner of a commercial property can claim allowances so long as the property is owned on a Freehold and it is owned by the business or its owners and not a pension fund or similar.
- An embedded capital allowance can be claimed at any time while the property remains in your ownership.
- There is no time limit for claiming allowances on property purchased before April 2012, but new rules have imposed limits on property bought or built since April 2014. If this describes your situation, get in touch right away.
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