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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

From April 2020 non-resident landlords are to be brought under the UK corporation tax regime.  This brings with it a significant shift in the way non-resident landlords will be required to conduct their tax affairs.  One consequence is that the new interest expense restrictions will apply.  Here we explore who is likely to be affected and what can be done about it.

The shift from paying income tax at 20% currently to moving across to the corporation tax regime where tax rates are currently at 19% and earmarked to fall further (to 17%) is a positive for non-resident landlords.  It does however, bring with it the requirement to satisfy all the same obligations and restrictions which exist for current UK corporates which includes the recently introduced restriction on the amount of deductible interest-like expenses.

Although the new rules have been effective from April 2017 they only apply to the UK corporation tax regime. In simple terms the new rules disallows interest-like expenses to the value of approximately at least £2 million across a group.

£2 million may on the face of it seem a reasonable threshold but with the amount of debt on property investments it is likely that most non-resident landlords will be caught in this new regime. Therefore, despite the reduced corporation tax rate, they will suffer from increased tax liabilities reducing the net return on their investments.

Non-resident landlords who were previously able to mitigate the tax using the interest debt relief often did not need the tax relief offered by Capital Allowances and therefore it was not a consideration during the transaction process due to the negligible benefit it provided.

However, this is likely to change going forward with Capital Allowances offering the only means to mitigate the increased tax burdens. Coupled with the changes to the Capital Allowances legislation effective from 2014 on property acquisitions (s187a Capital Allowances Act 2001), one can expect an increase in the number Capital Allowances enquiries during the due diligence process on transactions.

It will be essential that investors receive the necessary specialist Capital Allowances advice, even if it is just to ensure that contract wording is drafted in a way to ensure that any ability to claim post completion is not lost due to an unnecessary oversight or omission, commonly due to a mistaken perception that Capital Allowances don’t apply or cannot be claimed by a Purchaser.