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Capital allowance claims unfounded

Sam Cordon

December 4, 2013

A story published yesterday by The Telegraph said commercial property owners could be sitting on billions of unclaimed tax relief. But it warned that they could face losing out due to changes set to come into force in April with the implementation of the 2012 Finance Bill.

David Shortt, principal at Oliver Rae, said: “The 2012 Finance Bill introduced many changes, some of which will bite as of April 2014, changing the landscape of property capital allowances quite dramatically.

“But owners of commercial property purchased before April 2012 will remain unaffected, and able to claim all relevant plant and machinery allowances as normal.”

Under the capital allowances scheme businesses are able to get tax reliefs on Plant and Machinery within their property and most firms claim for items such as IT equipment, furniture and specialist equipment.

However smaller businesses – including clients who own qualifying buy-to-let residential properties often miss out on the potentially valuable allowances tied up in the ‘invisible’ areas of their properties.

And with changes afoot Shortt warned that owners looking to capitalise on such allowances must ensure their claims are in order before April 2014.

He said: “If you own a commercial property and are not selling it the changes will not have an effect on you.

“But if you sell it after 2014 and a conveyancer does not ask you the relevant questions about the allowances then neither you nor any subsequent purchasers of the property will be eligible for them.

“Solicitors will therefore need to be much more aware of this area, as when dealing with the replies to enquiries on commercial purchases, they will need to ensure that the question of property capital allowances has been properly dealt with.”

But all is not lost for those purchasing a property after the April deadline as subsequent capital expenditure after that date is also unaffected.

Shortt said: “Subsequent capital expenditure on post April 2014 property is also unaffected, for example a £200,000 refurbishment or extension.

“So whereas it is important that commercial property owners and solicitors make themselves aware of the reality of property capital allowances, it is far from the apocalypse scenario that some promoters are claiming.

“If anything, these changes present you with the ideal opportunity to engage your clients and their accountants and solicitors, to ensure that not only do they claim all of the allowances in their current portfolio, but also bear in mind the savings that they can make moving forwards with their new purchases.”


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