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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

Maximising the amount of Capital Allowances identified within a project will reap significant savings. However, it is important not to overlook other factors that can inherently improve cash flows and savings. Three simple examples are set out below:

Irrecoverable VAT

For some reason the issue of VAT is often forgotten about when preparing Capital Allowances claims. For many organisations, or individuals, it is not possible to recover the VAT on building works being incurred; common examples are financial and insurance organisations which have VAT exempt undertakings, and individuals such as GP practitioners who are not VAT registered.

One way of offsetting part of this cost is allocating the proportion of the irrecoverable VAT to the qualifying Capital Allowances; the VAT position should therefore be raised at the outset of a project if there is any doubt on the clients ability to recover VAT.

Accelerating Cash Flow Benefit

There are various ways in which to accelerate the cash flow savings so the benefit is realised in the year of expenditure rather than over a number of years. These include the identification of either Land Remediation Relief, a 150% tax relief available on items such as removing asbestos in buildings, or more commonly through the identification of energy efficient plant and machinery.

It is widely known that mechanical and electrical works typically qualify for Capital Allowances; however it is often assumed that these works all qualify as integral features, which are written down at 8% per annum, ignoring the possibility that actually they could instead deemed to be classified as plant and machinery, written down quicker at 18% per annum, or are even energy efficient products which benefit from 100% first year allowances.

The accelerated cash saving in the year of expenditure could therefore be 12.5 times greater if processes are put in place to identify certain types of products. However, without a specialist Capital Allowances advisor to implement the correct processes and investigate the individual products it is conceivable that these allowances will be missed.

Structuring Contributions and Grants

To maximise the benefit of Capital Allowances where capital contributions are given it is often advisable to structure the agreements to allocate the expenditure to qualifying items as much as possible.

The same in reverse applies where occupiers or clients receive grant funding associated with fitting out or developing their properties. A recent example is a medical centre, owned by the five practising GPs, who undertook a refit of the premises including a small extension.

As part of the works the GPs received a grant from the NHS and a contribution from the neighbouring pharmacy which together covered 90% of the £1m project cost. However, despite this, and because the grant payments were allocated to certain works including non-build costs such as lawyer fees, plus the GPS were not registered for VAT, it was still possible to save the five partners over £200,000 in tax between them.