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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

2018 could see significant tinkering to the Capital Allowances legislation.  HMRC consulted on revamping the Capital Allowances system last November.  We look at what is being proposed and the potential impacts.

What is being proposed is a move away from the current “pooling” Capital Allowance system to an asset-based accounts depreciation approach.  Now you can be forgiven for having deja vu, as this suggestion has been raised and dismissed on several occasions in the past and so it does raise the question as to why we are here again.

The perceived benefit is that a doubling up of the accounting treatment of assets to match that of the tax treatment, will simplify the tax submission process for businesses.

This however, will not remove the need for businesses to allocate costs of individual assets to match the appropriate class of depreciation, which is a common gripe of the existing system.  That being said, the introduction of Integral Features did provide a more prescriptive list of asset heads which the vast majority of expenditure already falls under.  Equally, the Annual Investment Allowance currently provides £200,000 of tax relief in each tax year and so will cover the many smaller businesses typical level of annual capital expenditure.

Such a move would appear to have the usual winners and losers scenario, with the large infrastructure businesses with extensive asset inventories, the businesses to benefit the most, with added administrative burden for the numerous smaller businesses who currently don’t have to do segregated depreciation.  It would also allow tax relief to be claimed against currently non-qualifying expenditure, something which has not been seen since the abolition of Industrial Building Allowances (IBAs) back in 2011, when the entire property received some form of tax relief.  In a time when the Exchequers coffers are being squeezed, proposing an alternate system which will be more generous in giving tax relief seems an unlikely outcome of the review.

The current Capital Allowance system provides HMRC with a very flexible approach which it has used regularly to influence the investment into certain areas.  Recent examples include the Business Premise Renovation Allowance for investment in bringing empty buildings back into use and Enhanced Capital Allowances for investment in green technologies.  It is difficult to see how a deprecation-based approach would give the Government that same degree of flexibility.

The argument put forward that going into a low corporation tax environment reduces the need to have Capital Allowances does not recognise that it is the only way of incentivising investment in property.  In a post Brexit world, Capital Allowances can provide significant influence for businesses to invest and to change direction now would cause major disruption to businesses over what would be an inevitably prolonged transition period.

Veritas Advisory will continue to engage with HMRC and will provide updates in future newsletters or on our website www.veritasadvisory.co.uk