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Capital v Revenue – Understand The Risks v Benefit

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

24 Jan 2024

Written by: Matt Bell

First Year Allowances for Corporate Members of Partnerships

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

19 Jan 2024

Written by: Abu Choudhury

Substantial Unclaimed Capital Allowances On Existing Assets

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

23 Oct 2023

Written by: David Gibson

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Latest News

Capital v Revenue – Understand The Risks v Benefit

24 Jan 2024

As we are fast approaching the self assessment filing deadline for individuals and the amendment window for corporate entities with a year end of March, understanding the importance of what constitutes capital or revenue expenditure, and the risks and benefits associated with it, is extremely important.

First Year Allowances for Corporate Members of Partnerships

19 Jan 2024

In a positive move HMRC have updated their capital allowances guidance for partnerships stating that partnerships with underlying corporate partners can claim first year allowances

Substantial Unclaimed Capital Allowances On Existing Assets

23 Oct 2023

Capital Allowances provide an opportunity to save substantial amounts of money in a lean market yet many property owners and occupiers are already sitting on vast savings without even knowing it.

The Risk to Lawyers of Not Correctly Addressing Capital Allowances

23 Oct 2023

Solicitors acting for clients on a purchase or disposal of a commercial property must ensure they correctly address capital allowances; failure to do so may give rise to reputational and / or financial risk.

Maximising Capital Allowances and Avoiding Pitfalls Through Timing

23 Oct 2023

The rules surrounding the transition between Super Deduction and Full Expensing can be complex and the importance of fully analysing and understanding any contract for construction or purchase is significant.

Use Capital Allowances to Help Pay for Higher Spec Offices

23 Oct 2023

On a typical £1m CAT B fit out the landlord or occupier, whoever is incurring the expenditure, could recover up to £250k by claiming Capital Allowances.

HMRC Capital Allowances Enquiries Focusing On Certain Sectors

26 Sep 2023

An increasing number of claims being submitted to HMRC are not fully compliant with the legislation, and in some cases are double what they should be, particularly in certain industry sectors.

Unearthing Hidden Treasures – LGT Wealth Article

01 Sep 2023

Veritas Director David Gibson was recently interviewed by Nicholas Duffy of LGT Wealth Management for thoughts on how family offices and property owners can identify Capital Allowances to help leverage other investments. Click here to read in full

Offset ESG Costs With Capital Allowances

09 Aug 2023

The impact of both ESG and MEES on the property sector is resulting in significant capital investments. To incentivise and reduce the net cost of capital investment, tax relief is available by way of capital allowances.

New measures designed to restrict tax avoidance by large multinationals could also hit the profits of property investors.  Under proposed plans, the ability to offset your tax bill with all finance interest payments is to be capped to between 10% and 30% of profits.

This would result in higher tax bills for some and would particularly impact on real estate companies who often carry a high level of debt.

REIT companies could also be affected given that whilst they do not pay tax they are required to distribute 90% of their tax-exempt profits.  This would mean that if a portion of their interest payments were not tax deductible dividends would increase against a possible drop in the actual returns being made.

”In recent years, Capital Allowances has been seen as one of the few legitimate ways in which companies and individuals can look to mitigate tax”

As with the general property market, the way in which property is financed goes in cycles and in the current market of relatively low loan to values it has already created a widening gap between income receipts and the allowable tax deductions.  So any talk of reducing the ability to fully deduct for loan interest payments should be a concern for some.

This coupled with the current trend of rising rents means that this gap is only likely to widen further, with tax becoming an increasing cost to investment returns.

In recent years, Capital Allowances has been seen as one of the few legitimate ways in which companies and individuals can look to mitigate tax on property.  This is set to continue and Capital Allowances will be of greater importance should this measure get the green light.

Capital Allowances also offers investors the added flexibility of being able to claim from day one, whilst being able to roll any unclaimed allowances forwards to a future period, when there is often a greater need to mitigate tax.  This will allow investors to adapt to changing market conditions and future proof against those unforeseen changes, such as the one being proposed.

This change is part of wider consultation on the tax deductibility of interest expense, with the deadline for responses by 14 January 2016, with any new rules planned to come into force on 1 April 2017.