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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

Lease incentives, especially where building works are to be carried out by one party or the other, can be negotiated to benefit both the landlord and the tenant.

To entice occupiers into properties in a competitive market it is not unusual for landlords to offer monetary inducements (reverse premiums) or offer rent free periods, each of which have differing tax implications.

Reverse Premiums

Reverse premiums or monetary inducements typically take the form of either a straight cash inducement for the tenant to spend as they wish, or a capital contribution specific to a tenants fit out works. Reverse premiums are taxed as income by the tenant.

However it is possible to reduce the amount that the tenant is taxed where there is a capital contribution made by the landlord to the tenant, whilst also maximising the tax relief available for the landlord. The common factor is Capital Allowances.

If a tenant receives a capital contribution for works which qualify for Capital Allowances then this amount reduces the amount which is taxed as income, and is not treated as a reverse premium.

Often landlords wish to claim Capital Allowances against the expenditure they are contributing to the tenants fit out works but fail to make any specific provisions within the contribution agreement for this, other than stating x amount will be provided for the tenants fit out works.

Simple wording which specifies against what contract expenditure the money will be incurred can both maximise the amount of allowances claimed by the landlord and also reduce the amount of income received by the tenant that will be taxed.

For the landlord the contribution or reverse premium is accounted for as capital expenditure added to the base cost of the building, in effect decreasing the capital gains tax on sale.

Rent Free Periods

The effect on a tenant is that they can retain the benefit of any Capital Allowances on fit out works they may be undertaking, which is especially valuable on long leases, plus also save on the rent during the rent free period. Additionally, there is no ‘income’ to be taxed on.