Insights
Seminars & Events
News

Latest Insights

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

Archive

 

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.

Whilst partnerships and individuals can as part of a covid-19 measure, defer income tax payments, the liability to pay the tax remains the same; companies however do not benefit from this with no delay in the timing of corporation tax payments to be made.

Capital Allowances related to historic expenditure offers significant tax relief when businesses need it most and so we have set out 4 simple steps to assist companies to identify valuable cash savings.

Many property owners and occupiers have not maximised Capital Allowances claims on historic expenditure due to being unaware of the nuances of the legislation, claiming only on items not integral to the building or perceiving there are no allowances to be claimed.

No Time Restriction To Claim on Historic Expenditure

As long as the property or fixtures within a property are still retained it is possible to submit a Capital Allowances claim now on historic expenditure incurred going back as far as you can, with Veritas Advisory having advised on claims going back 30 years ago; the tax savings associated with these historic claims will be realised in the tax returns that remain open, as set out below.

A company, with a 30 September tax year end date, who acquired a property and then carried out a subsequent refurbishment in 1999, would be entitled to submit a claim on both amounts of expenditure and amend both tax returns for years ending 30 September 2018 and 2019.

In addition, as those allowances are written down over a number of years, the tax saving benefit would be accrued over both the current and future tax periods and for any unrelieved allowances they can be used to offset against future capital gains tax on sale.

The tax savings for companies equates to 19% of all qualifying expenditure; a £1,000,000 claim for Capital allowances will therefore give rise to £190,000 in cash savings, realised across the different tax periods.

For expenditure incurred since 1 January 2019 it is possible to achieve the full £190,000 tax savings in the tax period in which the money was incurred by utilising the annual investment allowance.

Examples of Unclaimed Capital Allowances

Typically nuances of the legislation commonly overlooked include opportunities to claim where properties are acquired with vacant space, properties occupied with non-tax paying tenants, capital contributions to tenants, to simply not claiming as not profit making at the time or for acquisitions, the Sellers stating that no Capital Allowances were available to Buyers.

A Seller having claimed all the allowances they were entitled to will not necessarily preclude a claim for a Buyer, even where a £2 s198 election may be agreed, because the entitlement to claim for the Buyer can be different to that of the Seller.

Overcoming Perceived Barriers to Claim

A perceived barrier to submitting claims on historic expenditure is a lack of detailed records supporting costs incurred on historic developments, refurbishments or extensions, but this is easily overcome.

There is no requirement to retain detailed cost expenditure; HMRC will accept a claim which is built up from first principles using measurement and cost estimating techniques, similar to a purchase claim, with any claim being based on the Capital Allowances legislation applicable at the date of the expenditure.

The only requirement is evidence of the expenditure having been incurred and guidance provided as to the nature of the works carried out.

4 Simple Steps to Follow

To take advantage of the unclaimed allowances related to the historic expenditure we recommend the following steps:

  1. Create schedule of existing owned or let properties
  2. List dates of capital expenditure incurred for each property, including purchase date, dates of refurbishments, fit outs, capital contributions, developments or extensions
  3. For all acquisitions add the purchase price and land registry title number. For capex expenditure add approximate expenditure if actual expenditure not known
  4. Request a free initial estimate of potential allowances and tax savings