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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

The ability for annual capex reviews to attract Capital Allowances is often hidden and difficult to spot the benefit. Here we provide some areas of expenditure to focus on for that tax year end rush.

Time, lack of information, not seeing the benefit can all lead to missed Capital Allowance claim opportunities. To not address is often down to the question posed of,” what is the benefit to claiming?“. For expenditure to qualify for Capital Allowances the expenditure must firstly be capital and not revenue in nature. Items of expenditure which are repairs or operational expense should be posted to the P&L to obtain a full deduction. The remaining capital expenditure will not receive any form of tax relief unless it qualifies for Capital Allowances.

Typically, structural items of expenditure do not qualify for Capital Allowances such as walls, structural floors and roofs but the assets used for that building to function can qualify. One factor which will dictate the level of benefit is the type of expenditure incurred. If you were to take a typical office fit out of say £100,000, you would expect on average £65,000 to qualify for some form of Capital Allowance.

In cash benefit terms, for a high net worth individual paying 45% tax that would equate to £30,000 cash benefit; applying multiples of that £100,000 would give you an indication of benefit for those larger or smaller projects.

The difficulty is that expenditure appears as a lump sum payment on a fixed asset ledger, making it hard for the untrained eye to determine at face value and often requires more detailed analysis. Most accountants do not have the cost knowledge to maximise claims for construction projects. A good strategy can often be to firstly abstract any obvious directly qualifying expenditure such as IT equipment and to then collate all known “capital projects” into one single sub ledger to gauge the value of benefit at stake.

To then understand the nature of expenditure in terms of does it relate to building works, if so, is it a standalone building or extension, which could attract less allowances than for say either a fit out or refurbishment project.

What is the buildings use, it’s function and purpose? Who is incurring the money, occupier or owner, and are there potentially any works which could attract the 100% first year allowance. Also where fitting out works are shared between landlord and tenant a closer review is often warranted.

Typically, for any capital expenditure incurred over £50,000 in value, it is worthwhile reviewing as it equates to thousands of pounds of potential tax relief which would otherwise be missed out on.

Veritas Advisory offers its clients an annual capex service, which provides the client and their advisors with a free initial assessment to determine the availability of Capital Allowances and to then prepare claims in time for tax year end submissions.