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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:

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.

The point at which expenditure is “deemed” to have been incurred can bring an unexpected cash boost for clients at their tax year end.  We set out the key points to consider for determining how to bring forwards the entitlement to claim Capital Allowances.

It is possible for expenditure to be treated as being incurred for tax purposes long before a payment is due.  The legislation makes the provision for where a contract gives rise to an unconditional obligation to pay, no more than four months after which the obligation to pay becomes unconditional.

Therefore, if you take at face value that the timing of when you can claim Capital Allowances is in line with the entries shown on your fixed asset ledger you could be missing out on valuable tax relief.

In the case of a building contract, interim payment certificates are often raised on a rolling monthly basis from the start of the project to its conclusion.  The standard payment terms are often 30 days and so if your tax year end is 31 December 2015 and an interim payment is certified before then, even though it is shown as paid in January of the next period, Capital Allowances can be claimed on that payment in the earlier period.

The same principle applies to pre-payment of goods, in that often a piece of equipment is paid for in advance or a deposit paid.  The ability to then claim Capital Allowances will depend on the terms of the order and the underlying contract, but providing the ownership has passed and there is an “unconditional offer”, then Capital Allowances could be claimed at that point rather than when the delivery is made.

“To Do”

  • When reviewing construction payments, consider when expenditure is incurred to bring benefit of claiming Capital Allowances forwards
  • Check contracts for the treatment of pre-order or deposit payments