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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.

When HMRC decided to move the goal posts, stating that students went to University not just to study but to live, it meant that the interaction of capital allowances and the definition of dwellings clashed. Here we explain that despite this change in guidance, there still exists a great deal of benefit in claiming capital allowances on student accommodation property.

As an alternative market for property investors, typically with higher returns than for a typical core investment, combined with the supply and demand economics, many investors are developing purpose built student accommodation.

The one property sector for which claiming capital allowances are excluded from, is one which consists of your main dwelling home and so with the introduction of HMRC briefing 45/10, it categorised the cluster bedroom and studio as being deemed to be a dwelling and therefore ineligible for capital allowances.

It can be easy to overlook the fact that despite this change, the ability to claim capital allowances on student accommodation is still very much available to an investor. Typically, student accommodation buildings consist of clusters flats, but outside of that there are often communal corridors and shared facilities, such as common rooms, laundry, bike stores, plant rooms and management areas. These areas all fall outside of the residential definition and therefore, can still attract capital allowances.

The difficulty then is establishing the proportion of the building cost which can be treated as eligible versus non-allowable i.e. within the dwelling part of the property. It becomes even more complicated when you consider mechanical and electrical services which serve both dwelling and non-dwelling parts of the building.

On considering HMRC’s guidance it should also not be overlooked that for onsite campus student accommodation, the ability to claim on the bedrooms can still be considered providing certain criteria are met.

These often, high income producing assets, can take great benefit by maximising their claims for capital allowances either on behalf of the developing entity or alternatively, to pass over the benefit on disposal, to make a gain on sale.

Veritas Advisory have advised extensively on this expanding sector, including 10,000 rooms this calendar year; if you have any specific queries please contact Clive Curd our student accommodation specialist.