Capital Allowances are a very valuable form of tax relief. They are available to any individual or business owner whether purchasing new equipment or furniture for the business or whether purchasing, building or renovating commercial property.
Whether you are a commercial property owner or are incurring capital expenditure for your business you are entitled to claim these tax allowances, entitled capital allowances. They can be deducted from your taxable business profits at the end of the tax year resulting in a lower tax bill.
CAPITAL ALLOWANCES ON THE PURCHASE OF OFFICE EQUIPMENT, MACHINERY & FURNITURE
If your business regularly incurs capital expenditure on things such as computers, printers, office furniture, machinery and cars (Generally termed Plant & Machinery) you can and indeed should be claiming Capital Allowances on these items. These capital Allowances may be claimed by way of a 100% annual investment allowance or an 18% writing down allowance. From April 2014 up to 31 December 2015, for Corporation Tax and Income Tax purposes individuals, companies and partnerships may claim up to £500,000 of the cost of capital expenditure against taxable profits. It is not claimable on cars and returns to £25,000 from 1 January 2016. Once your capital expenditure exceeds £500,000 in the tax year you may claim a writing down allowance of 18% of the cost/tax written down value of your business fixed assets. When treating expenditure as capital in nature it is very important to distinguish between what is a repair and renewal and what is indeed an item of capital expenditure.
CAPITAL ALLOWANCES ON COMMERCIAL PROPERTIES
Generally speaking although significant tax savings can be made from claiming Capital Allowances on the above we think it’s fair to say that the savings are even greater for businesses claiming these allowances on commercial properties. They can run into tens of thousands of pounds. If you incur expenditure on a new building or fit out works to an existing property you should be claiming allowances on all of the items within the property which qualify as plant and machinery. This includes things such as demountable partitioning, air conditioning, alarm systems, light fittings and heating systems. This is a very detailed and specialised area and involves identifying which aspects of the expenditure are part of the structure/building and which parts are moveable and qualify as plant and machinery.
Capital Allowances (particularly on commercial properties) is a very specialised area and one which due to its complex nature is often overlooked. The director of Millhouses Accountancy, Jason Scholey spent just under 10 years working on Capital Allowances for a very large commercial law firm with offices all around Europe. As such Millhouses Accountancy in (conjunction with one of our partner firms) are offering this as one of our specialised services. Therefore whether you are a small business with a few items of furniture and equipment, or whether you are a large company with commercial properties, we feel sure significant tax savings are to be had by looking at the capital expenditure your business has incurred during the year and claiming Capital Allowances on it.
We can provide you with a Capital Allowances report which analyses all of your capital expenditure into an amount which qualifies as Plant & Machinery for Capital Allowances purposes and an amount which qualifies as repairs and renewals in your Profit & Loss Account (which is also deductible against your income). Why not contact us for a no obligation free initial consultation.