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Veritas Blog for Harold Sharp Proptech

As part of our working relationship with Harold Sharp accountants we were recently requested to add an article on the new Structures and Buildings allowances for their Proptech initiative.

09 Dec 2019

Written by: Nolan Masters

Guidance on Structures & Buildings Allowance

It has taken HMRC a year since the Structure and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings.

09 Dec 2019

Written by: Clive Curd

New Case Law – HMOs and HMRC Enquiry Times

Another recent Case law ruling, Hora Tevfik v HMRC (2019) recently dismissed Capital Allowances claims on HMOs (Houses of Multiple Occupancy) plus also highlighted the ability of HMRC to make enquiries into claims beyond the normal time limits.

11 Nov 2019

Written by: Clive Curd

Archive

Latest News

Veritas Blog for Harold Sharp Proptech

09 Dec 2019

As part of our working relationship with Harold Sharp accountants we were recently requested to add an article on the new Structures and Buildings allowances for their Proptech initiative.

Guidance on Structures & Buildings Allowance

09 Dec 2019

It has taken HMRC a year since the Structure and Buildings Allowance (SBA) was announced in the November 2018 budget to publish the detailed guidance on its new tax give away for capital expenditure on all non-residential buildings.

New Case Law – HMOs and HMRC Enquiry Times

11 Nov 2019

Another recent Case law ruling, Hora Tevfik v HMRC (2019) recently dismissed Capital Allowances claims on HMOs (Houses of Multiple Occupancy) plus also highlighted the ability of HMRC to make enquiries into claims beyond the normal time limits.

Veritas Publish SBA Article in Taxation magazine

10 Jul 2019

In the latest edition of Taxation Magazine Veritas Director Clive Curd takes a practical look at how the new Structures and Buildings Allowances legislation works.

Success at the National Surveyor’s 7’s Rugby Tournament

17 May 2019

Congratulations to Jack Hooper of Veritas and his teammates from the Thirdway Barbarians team who won the recent National Surveyors 7's rugby tournament at Richmond

Veritas Become Member Firm of PAI Commercial Property Network

07 May 2019

Veritas are pleased to announce they have become a Member Firm of PAI Commercial Property Network, the UK's largest connected network of commercial surveying practices.

SBA Draft legislation Out

15 Apr 2019

HM Revenue & Customs have issued the draft legislation for the new Structures and Buildings Allowances legislation and have requested comments by April 24th before final drafting ready for issue later this year. Veritas Advisory will be responding.

New Case Law – £226m in Dispute!

05 Apr 2019

The First Tier Tribunal considered the capital allowance claim of a hydroelectric power generation scheme at Glendoe, in Scotland; the total construction cost was approximately £300m with HMRC accepting £34 million, leaving £226 million in dispute.

Veritas Advisory Appointed Capital Allowances Supplier to Carehome.co.uk

08 Mar 2019

Veritas are now a listed supplier to Carehome.co.uk as Capital Allowances advisor to maximise the tax reliefs on acquisitions, refurbishment and extensions of care homes.

With the constant fluctuation in fiscal policy on the available tax relief for property expenditure, it can give rise to missed cash savings via Capital Allowance claims.  In this briefing, we provide a reminder for businesses, investors and individuals as to what tax reliefs are available and their benefit.

  1. Plant and Machinery Allowances

Plant and Machinery (P&M) Allowances are the main form of tax relief claimable against certain qualifying fixtures.  There are two forms:

  1. Main Pool – General P&M
  2. Special Rate Pool – Integral Features & Thermal Insulation

General P&M relate to assets which have a faster rate of depreciation, namely IT, furniture items etc. but also apply to building items such as fire alarm and security installations.

Qualifying expenditure is written down at 18% per annum on a reducing balance basis.  For £100,000 of qualifying expenditure, you would claim £18,000 in year 1, with the residual balance of £82,000 carried forward.  18% is then taken in the subsequent period until that fixture is below £1,000 or has been sold or scrapped.

Integral Features are as the name suggests for those fixtures which are more integral to a building and have a longer depreciation life such as heating, main electrics, cold and hot water services. Thermal insulation is expenditure incurred improving the thermal performance of an existing building, such as new glazing or cladding.

Qualifying expenditure is written down at 8% per annum again on a reducing balance basis, although note this is to change to 6% from 1 April 2019 for corporates and 6 April for individuals.

  1. Enhanced Capital Allowances

Enhanced Capital Allowances (ECAs) are for fixtures which qualify either as being energy efficient or water saving technologies.  The Carbon Trust set the criteria for which supplier’s products must satisfy in order for the expenditure to qualify.

The benefit is that the standard rates for P&M Allowances is accelerated to 100%, in the year of expenditure.  The complexity is that the product must either be certified or a listed product on the energy technology list at the point the expenditure is incurred.

In the last budget it was however, announced that this allowance was to be abolished from 1 April 2020 and so for any planned expenditure which has the potential to be claimed for ECAs, the expenditure must be deemed unconditionally incurred before this date, to take the benefit of the 100% tax relief.  After 1 April 2020, the normal rates of Capital Allowances will still apply.

  1. Structures and Buildings Allowances

Structures and Buildings Allowances (SBAs) were announced in the last budget and provide a straight line 2% rate of tax relief over 50 years on any new qualifying expenditure.  The normal P&M allowances will be claimed as before, with the SBA taken on qualifying expenditure not already receiving tax relief.  This will also include some associated professional fees and any demolition costs, but will not include all expenditure, for example planning or general landscaping costs would not qualify.

Therefore, a process of data capture will be required and the need to abstract normal P&M expenditure before capturing the qualifying SBA expenditure.

Unlike for normal P&M allowances, to the extent SBAs are claimed it will reduce the base cost for when the capital gain tax position is calculated on sale.

SBAs automatically pass over to the next owner and so will require a record of when the SBA 50 year life started and the value to be passed across.

  1. Research and Development Allowances

Research and Development Allowances (RDAs) are for expenditure on fixed assets which are to be used wholly or partly in an R&D qualifying activity.  The benefit is that the total building expenditure will qualify for 100% tax relief in the year of expenditure, unlike SBAs which are claimed over a 50 year period.

The key is to firstly identify whether the building is to be put to a qualifying use and this is seen as an activity which is innovative or new to science.

Even where the activity is confined to part of a larger property, the legislation allows a pro rata approach, likewise where a space has mixed users, it is possible to apply a time apportioned approach to claim a portion of the total building cost as qualifying for RDAs.

  1. Land Remediation Relief

Land Remediation Relief (LRR) is not a form of Capital Allowance, but relates to property and land expenditure, providing tax relief to clear any contamination in the land or buildings, such as asbestos, gas, underground oil tanks and Japanese knotweed.

The benefit is that it provides 150% tax relief and is available to both investors and developers, with the latter taking the original cost as a development expense and an additional 50% as qualifying for LRR.

There are several restrictions which have to be checked, for example the claimant cannot be the contaminator or connected to and must be subject to UK corporation tax.  It is worth noting that from April 2020 when non-resident landlords are to be brought fall under the corporate tax regime, they too will then be able to claim LRR, but not for past expenditure incurred under the income tax regime.