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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

It was announced in the budget that the Annual Investment Allowance would increase from its current £200,000 level to £1,000,000 from 1st January 2019.  This gives the majority of businesses the ability to receive 100% tax relief in the year of expenditure for all qualifying plant and machinery expenditure over the next two years.  Here we set out the main ways that a business can utilise this valuable tax relief.

All businesses including non-resident landlords can claim the Annual Investment Allowance (AIA), with the exception of mixed partnerships being specifically excluded.  In our experience, this valuable form of tax relief can often be overlooked when completing the relevant tax returns and this can be due to a number of reasons.

Firstly, the expenditure on which the AIA can be claimed on can be unclear, both in terms of the eligibility and also in terms of having sufficient details to determine the qualifying expenditure in order to make a claim.  In terms of what items of expenditure can be claimed upon, it is any expenditure which qualifies for your normal Plant and Machinery Allowances.

For any direct purchases, this can be easier to identify, such as the buying of new IT equipment or trade related machinery.  Where the complexities often arise is in identifying qualifying expenditure which is part of a larger capital project such as a building refurbishment, extension or new build.  In this case the expenditure is often priced by the builder/developer and can often be limited in the level of cost breakdowns.

Even where the costs are not sufficiently broken down, there is still the ability to make a claim for AIA, but will often require employing a Capital Allowances specialist, such as Veritas Advisory who as Chartered Surveyors are able to calculate their own cost breakdown to a level which would stand up to HMRC scrutiny.

The other area of expenditure which can be overlooked is on second hand acquisitions, which is a less obvious form of qualifying expenditure and again will require the services of a specialist to value the qualifying expenditure.  When it comes to second hand acquisitions of property, there is a legal mechanism, applicable in most instances, by which the value of the inherent Capital Allowances is passed across via a s198 election, and which must be in place within 2 years of completion.

Often the question of Capital Allowances is over looked, with the purchaser missing out altogether and so it is critical to ensure that the contractual position is robust, binding the Seller to agree to pass over the unclaimed Capital Allowances.

Finally, the AIA is as the name suggests an annual allowance and so where projects span a number of tax periods, the claiming of the AIA can be overlooked in the earlier periods of expenditure.  Even if the project is uncompleted at the time of the tax return submission, the AIA can still be claimed on qualifying Capital Allowances incurred at that point as part of an interim claim submission.