Insights
Seminars & Events
News

Latest Insights

Furnished Holiday Lets – HMRC Clarify Legislation

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

07 Nov 2024

Written by: David Gibson

New Case Law – Capital v Revenue

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to dedeuct costs has been raised considerably

04 Oct 2024

Written by: David Gibson

HMRC To Increase Scrutiny on Capital Allowances Claims

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

04 Oct 2024

Written by: Russell Bennett

Archive

 

Latest News

Furnished Holiday Lets – HMRC Clarify Legislation

07 Nov 2024

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

New Case Law – Capital v Revenue

04 Oct 2024

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to dedeuct costs has been raised considerably

HMRC To Increase Scrutiny on Capital Allowances Claims

04 Oct 2024

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

100% Full Expensing – What is it and why it’s important

09 Sep 2024

Hailed as the “Greatest Tax Break in History” when it was introduced in 2021, the 130% Super Deduction aimed to take some of the sting away from the hike in Corporation Tax rate that was announced in the same speech. Its replacement, Full Expensing (FE), took over in April 2023 as a slightly less headline-grabby 100% First Year Allowance. But what is it?

Some Good News for Furnished Holiday Let Owners

05 Aug 2024

Positive transitional rules have now been published allowing Furnished Holiday Let owners the ability to use Capital Allowances beyond April 2025

Case Ruling – HMRC v Altrad Services Limited

10 Jul 2024

The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed

Spring Budget Update

06 Mar 2024

Chancellor Jeremey Hunt announces changes to the capital allowances legislation affecting furnished holiday let owners

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

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.