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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

With the multitude of legal and commercial terms to agree to get a deal over the line, capital allowances can often be a casualty with a desire to not want to slow or delay a deal.  It can also be that for some sellers they cannot or do not want to assist on passing over any known or often more to the point, unknown capital allowances, so you end up with agreeing to an election under s198 of the Capital Allowances Act (CAA) 2001 for £2.00.  The effect of which is to say that, to the extent the seller had entitlement to claim, they are not passing over any unclaimed allowances to the buyer.

Where this is the case, then it can automatically be felt that there is no further tax relief for capital allowances available on the deal, but that is often not the case.

If the contract is silent, then there is still a two year window in which a s198 election can be entered into to pass across any unclaimed capital allowances, but without a contract clause provision, it would be reliant on the goodwill of the seller, which is often achievable, as in most cases there is no downside for the seller.  Significant tax relief can be gained where a known capital project has been undertaken, such as a recent refurbishment, as this often will not have been claimed on and therefore the buyer can undertake the quantification and elect across the benefit within 2 years of completing.

If a past owner has paid a capital contribution to an incoming tenant, the landlord has the entitlement to any capital allowances on that payment and it falls outside of the s198 election restriction.  Contribution allowances instead pass across at the tax written down value or if not claimed, then the buyer can make a claim.

The introduction of Integral Features as a new allowance gave rise to the ability to claim on new headings of fixtures, such as cold water and electrical systems and so if the purchase represents the first after the introduction on the 1 April 2008, then the buyer has an unrestricted claim on those qualifying fixtures as they have not been claimed previously.  Overage claims can amount to up to 15% of the purchase consideration and is calculated based on a valuation exercise apportioning the price paid between a cleared site land value, rebuild cost and value of the qualifying fixtures.

There is a more unusual quirk in the capital allowances legislation, which is often overlooked, which is to provide the new buyer with the entitlement to claim on those acquired fixtures which have been installed by a tenant prior to purchase.  Should the tenant be a non-tax paying entity such as a government body and have spent money on their own fit out, then the new buyer can claim on those fixtures as there has been no prior right to claim and the items become fixtures in the property.

Additionally we have often reviewed historic acquisitions pre-dating the capital allowances legislation changes in 2014, and on which no claims have been made, when the legislation requirements on acquisitions weren’t as stringent as they are now, giving rise to claim opportunities which may not be possible if the property was acquired today.

These are just some examples of the additional claim opportunities that can arise, so all is not lost, and it is still a worthwhile exercise to engage with a capital allowances specialist who will be able to establish any potential allowances in a short space of time.

Should you have a past property purchase that hasn’t had a detailed capital allowances review undertaken, then please contact one of our directors for an initial consultation.