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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

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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 fitting out of any property space often comes with a large capital cost.  The only way that cost can be offset for tax purposes is to claim Capital Allowances and Revenue Deductions.  In this article we set out one example where 35% of the total fit out cost was recovered.

Given the nature of fit out projects, typically with minimal structural works, they often give rise to a high proportion of qualifying expenditure. There is sometimes a perception that to identify Capital Allowances within fit out projects it is simply a case of referring to a list of items that typically qualify and extract these from cost information provided by the contractor carrying out the work. Whilst there is legislation that provides guidance on what qualifies there is no explicit list as such.

Consideration needs to be made not only to the cost of the item within a building contract but also to all the additional ancillary costs which are linked to the installation of that qualifying item. Often these ancillary costs can add 25-35% to any claim for Capital Allowances.

These ancillary costs are not restricted to on costs, such as site set up costs and professional fees but also include costs not always clearly defined in construction projects such as alterations to existing structures, forming service risers, or removing / replacing ceilings, walls, floors to allow for the installation of qualifying items.

An example could be the cost of taking down, storing and putting back a floor to allow for the electric and data installation, or on a larger scale, the formation of new lift shafts within an existing building. With fit out projects there is greater opportunity to claim for these works due to the very nature of the build methodology.

These costs are often not apparent within information provided by a contractor and so it is necessary for a specialist Capital Allowances advisor, with surveying expertise, to visit site and extrapolate these works.

Identifying such ancillary costs resulted in a claimant recovering 35% of the fit out expenditure on a standard office fit out project costing £800,000. £625,000 qualified as Capital Allowances, with further costs being treated as revenue deductions which can be offset in the profit and loss account. The claimant was a partnership, with each partner subject to 45% income tax. Consequently, on an outlay of £800,000 the partners between them were able to recover over £280,000 off their tax bill, with the majority being saved immediately in the year of expenditure.