Businesses in the East Midlands could be losing out on thousands of pounds of unclaimed tax allowances on their commercial properties.
An estimated 90 per cent of properties in the UK have unclaimed capital allowances against them as many businesses are unaware of the extent of their entitlement, according to property consultants Bruton Knowles.
Capital allowances are retrospective claims based on the original purchase price of the property and can be claimed on plant and machinery and other items. Allowances on a typical commercial building can amount to almost a third of the purchase price or building cost.
All commercial buildings have claimable allowances inherent within the purchase price. To qualify for the tax relief, the property owner must be a UK commercial taxpayer, own a commercial property with a purchase price of more than £200,000 and the property must not be owned by a pension, charity or developer.
Although capital allowance claims are not new, the law governing such claims has been significantly revised by the Finance Act 2012, which comes into effect with the new tax year in April 2014. One of the key changes is that capital allowances must be fully considered at the time of the transaction.
James Bailey, head of Bruton Knowles’ Nottingham office, said: “In the future it will only be possible for a buyer to make a claim if a joint election is made between the contracting parties or a value is assigned for the fixtures by tax tribunal. To benefit form capital allowance claims it is therefore important for both parties to a transaction to obtain a detailed breakdown of the cost of new buildings or alterations to existing buildings. This allows a proper apportionment of the claimable items.
“With allowances on a typical commercial building amounting to almost a third of the purchase price or building cost, it would be a serious disadvantage to any property owner not to fully capitalise on the tax relief available when making a move.”
