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Capital Allowances Incentives to Increase?

In a positive move to encourage capital investment Rishi Sunak announced in the 2022 Spring Statement plans to expand the Capital Allowances legislation, subject to a consultation process, to be formally announced in the autumn budget and to take effect from April 2023

23 Mar 2022

Written by: David Gibson

Veritas Contribute to UKAA Publication – Improving Returns on Build to Rent

As a member of The UKAA, we were pleased to be invited to contribute to their latest buzz news issue, in which we explain how investors-operators of build to rent can improve investment returns by claiming capital allowances

02 Nov 2021

Written by: Nolan Masters

Veritas Confirmed New Member of UKAA – The Organisation for the UK Build to Rent

Veritas Advisory have now been confirmed as a new member of UKAA, the organisation for the UK Build to Rent sector. 

18 Oct 2021

Written by: David Gibson

Archive

 

Latest News

Capital Allowances Incentives to Increase?

23 Mar 2022

In a positive move to encourage capital investment Rishi Sunak announced in the 2022 Spring Statement plans to expand the Capital Allowances legislation, subject to a consultation process, to be formally announced in the autumn budget and to take effect from April 2023

Veritas Contribute to UKAA Publication – Improving Returns on Build to Rent

02 Nov 2021

As a member of The UKAA, we were pleased to be invited to contribute to their latest buzz news issue, in which we explain how investors-operators of build to rent can improve investment returns by claiming capital allowances

Veritas Confirmed New Member of UKAA – The Organisation for the UK Build to Rent

18 Oct 2021

Veritas Advisory have now been confirmed as a new member of UKAA, the organisation for the UK Build to Rent sector. 

Veritas Supporting Charitable Causes

01 Oct 2021

We have chosen to support four charitable causes reflecting activities that are close to us and to people we know and would like to raise awareness of.

Using Artificial Intelligence for Capital Allowances

27 Sep 2021

Can Artificial Intelligence help claim capital allowances? In addition to preparing detailed claim reports for clients, Veritas Advisory, in partnership with Brunel University and Innovate UK, are applying technology to solve some of the issues, the main one being how to use data efficiently and correctly.

New Case Law – Potato Store is Plant

07 Aug 2021

JRO Griffiths Limited v The Commissioners for Her Majesty’s Revenue and Customs [2021] UKFTT 257 (TC) resulted in the taxpayer winning their appeal in whether or not a warehouse used to store potatoes for a crisp manufacturer is plant.  The taxpayer won on 2 counts.

Estates Gazette Article – Capitalise on Allowances

20 Jul 2021

Veritas Advisory Director Nolan Masters, together with Alex Barnes a Partner at BDB Pitmans LLP, have published an article in Estates Gazette on how capital allowances claims can mitigate the increasing cost of tax on property investment.

New Case Law – Satellites

16 Jul 2021

A Capital Allowances case Inmarsat Global Limited and The Commissioners for Her Majesty’s Revenue and Customs UT/2019/0167 V), has been refused by the Upper Tier Tribunal, in relation to the launch of satellites.

Taxation Magazine Article – The New Super Deduction

04 Jul 2021

In the June edition of Taxation Magazine Veritas Advisory Director Nolan Masters set out how the new super deduction and special rate allowances will affect property owners, occupiers and investors. Click here to read the article in full

When to claim Capital Allowances can often be overlooked on developments and so here we consider the timings and associated benefits of early tax planning around developments.

Capital Allowances are available to be claimed in the tax year in which the qualifying expenditure is incurred.  Let us take the example of a business or investor who develops an office building which they intend to hold.  The investor has say a 31 December tax year end and the development starts on 1 April 2017 running 12 months on site to completion.  Under most traditional forms of development, the main contractor receives milestone payments, usually monthly up to practical completion.

Whilst the building is not finished at the 31 December 2017 tax year end, 9 months of work have already been paid for and the legislation provides entitlement to claim Capital Allowances once the qualifying asset is a fixture to the building.  This enables an “interim” claim to be made at the 31 December 2017 based on the expenditure committed to at that point in time.

The claimant, then has a further 12 months in which to submit that “interim” claim as part of their annual tax return which falls due by 31 December 2018.  This provides the benefit of claiming one year of allowances, which would otherwise be missed out on if left to be claimed on completion of the development.

A further “final” Capital Allowances claim is then prepared and submitted in the following tax year in which the project completes.

In practice, many business and investors embarking on such developments will rely on their advisors to pick up Capital Allowances and often it can be reviewed months after completion or worse case, not at all.

For this reason, we inform clients that our preferred time to get involved in a development is as soon as the project has reached outline design stage.  By considering Capital Allowances at this time, it will enable them to be tax planned and claims maximised, by creating efficiencies to information flows and generating Enhanced Capital Allowances for the procurement of energy efficient plant & machinery, which provide 100% tax relief, as opposed to claiming the relief over a number of years.

The legislation does provide the ability to go back in time to make a claim on any historic development expenditure, albeit in the last open tax return, as opposed to when the expenditure was incurred.  If, however Capital Allowances are not considered at the outset of a development, this can often result in them not being addressed at all.

If the utilisation of the Capital Allowances and intended holding period of the asset is unknown. By simply quantifying and claiming the Capital Allowances at the time of the development, it will help to mitigate against any possible future tax liabilities and maximise the level of claim, at the time the information is readily available.

To discuss this article or if you have any general Capital Allowance queries, then please get in contact with one of our Directors.