Capital Allowances
Capital allowances can be claimed on assets acquired for use in a business, allowing businesses to reduce their tax bill by deducting a proportion of these costs from their taxable profits year on year.
Capital allowances can be claimed on certain items contained within buildings, including converting space above commercial premises to flats for renting, plant and machinery and research and development.
The amount of the allowance depends on what is being claimed for. In some cases, the rates are different in the year the purchase is made from those in subsequent years.
Claims can be made retrospectively so even if you have already completed a project which you think may qualify, or are about to undertake a new venture, and would like further advice on making a claim, please contact our Taxation Services Director, Michael Henshaw.
Case Studies
Here are just some examples of successful capital allowance claims we have made on behalf of our clients.
- One of our Manufacturing clients incurred a £2.99m spend on extending their warehouse/factory unit. We got involved before the ground was broken and have liaised with the client and their quantity surveyor throughout the project, enabling us to identify items totaling £1.1m potentially qualifying for capital allowances. This equates to a corporation tax saving of £308,000.
- A nursing home client spent £6.73m on building and equipping a residential nursing home. We liaised with the architect and quantity surveyor and identified £2.09m of spend potentially qualifying for capital allowances, equating to a corporation tax saving of £585,000.
- Another nursing home client acquired a residential nursing home for £1.4m. We have been engaged to identify qualifying items within the building which may not have been the subject of previous capital allowance claims. We are enlisting the support of a property specialist who has indicated that there may be approximately £200k of items which will qualify, for which no previous claim has been made. This equates to a £42k corporation tax saving.
- An agricultural client acquired and equipped three chicken farms. We obtained a detailed breakdown of their £5.5m spend, visited the sites to get an idea of the function of various items and identified £3.5m potentially qualifying for capital allowances. As the business is a partnership, this equates to a potential income tax saving of £1.4m.
- We are currently working with a retail client who has spent £45k equipping and fitting out a shop. We have obtained a breakdown of the expenditure and, at this stage, believe that £25k may qualify for capital allowances, equating to a possible £10k in income tax savings.
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