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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

Written by:

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.

In July 2017 the Office of Tax Simplification made several recommendations for the simplification of Capital Allowances.  That September the Chancellor asked the Office of Tax Simplification to explore the potential for replacing Capital Allowances with a regime based on accounts depreciation.

Why did the Office of Tax Simplification (OTS) investigate changing the Capital Allowances legislation, what did they take into account to apply this to a new system and analyse this from a business point of view.

In 2015/16 1.2million businesses claimed Capital Allowances. The Exchequer forecasted in 2017/18 that if there was no relief for capital expenditure by way of Capital Allowances they would recover an additional a £21.5bn in tax.

Capital Allowances represents the 6thlargest relief overall and the only other business relief that is higher is the employer’s national insurance contributions.

However Capital Allowances is widely acknowledged as an over complicated system which has evolved over the years to its current state and any changes to the system would impact businesses differently by industry and size.

The consensus of all respondents to the consultation was any change away from Capital Allowances would not be straightforward.

The purpose of the report was to consider if depreciation was a feasible alternative approach, if a practical transition could be achieved and the consequences of such a change.

A concern of aligning Capital Allowances to depreciation was that the government could lose a degree of control such as not being able to adjust the writing down levels should the Government wish to encourage investment.

Examples of accelerated allowances that could be lost include the 100% energy efficient Enhanced Capital Allowances for green technologies plus research and development allowances.

Significant difficulties would also arise during any transition period with certain industries losing out.

On the flip side the depreciation system considered was to categorise assets for accounts into buildings, plant and machinery, fixtures and fittings, meaning that the process has only to be done once, reducing the burden to the taxpayer and simplifying the process.

Additionally, under the current regime a taxpayer is unable to claim on items where they receive a grant payment but under depreciation the amount is presented separately and not deducted from the asset. Similarly, capitalised interest is seen as too remote for Capital Allowances but can form part of the total cost in the assets.