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£1,000,000 AIA Extended for 12 Months

In a positive move the Government has today announced that the current Annual Investment Allowance (AIA) of £1,000,000, which was due to revert down to £200,000 on 1 January 2021, will be extended for a further year to 1 January 2022.

13 Nov 2020

Written by: David Gibson

Veritas Open Liverpool & Manchester Offices

We are pleased to announce the opening of two offices in Liverpool and Manchester to strengthen our existing offering and provide a local presence to both existing and new clients.

18 Sep 2020

Written by: David Gibson

Enhance SPV Tax Relief With Capital Allowances

When an SPV sells it's sole property asset significant tax relief can be realised on sale using Capital Allowances. Normally they are written down at 18% or 6% on a reducing balance basis but on cessation of trade a balancing allowance may be due, accelerating the timing of the tax savings, as per our example in this article.

07 Sep 2020

Written by: Clive Curd

Archive

Latest News

£1,000,000 AIA Extended for 12 Months

13 Nov 2020

In a positive move the Government has today announced that the current Annual Investment Allowance (AIA) of £1,000,000, which was due to revert down to £200,000 on 1 January 2021, will be extended for a further year to 1 January 2022.

Veritas Open Liverpool & Manchester Offices

18 Sep 2020

We are pleased to announce the opening of two offices in Liverpool and Manchester to strengthen our existing offering and provide a local presence to both existing and new clients.

Enhance SPV Tax Relief With Capital Allowances

07 Sep 2020

When an SPV sells it's sole property asset significant tax relief can be realised on sale using Capital Allowances. Normally they are written down at 18% or 6% on a reducing balance basis but on cessation of trade a balancing allowance may be due, accelerating the timing of the tax savings, as per our example in this article.

Use Capital Allowances To Reduce Your CGT & Taxable Income

07 Sep 2020

Until recently many offshore investors did not claim capital allowances due to having little or no tax liability. However, as offshore investors are now within the UK corporation tax legislation and pay tax on their capital gain, consideration of Capital Allowances to reduce their tax bill should always be made.

Veritas Article in Property Week Magazine

08 Jun 2020

As part of the Property Week magazine Covid-19 support hub Veritas Advisory director Nolan Masters highlights how using Capital Allowances can help generate significant tax savings and ease cash flow problems.

Veritas Article in Taxation Magazine

03 Jun 2020

Veritas have published an article in Taxation Magazine setting out how to boost cash flow by identifying property tax reliefs. Key points addressed in the article include reviewing historic expenditure where allowances haven't been fully claimed, using capital allowances to mitigate future capital gains, the window of opportunity to claim and the benefit of utilising the annual investment allowance of £1,000,000.

Capital Allowances Guide for PAI Member Firms

01 Jun 2020

Veritas Advisory director Clive Curd has prepared a Capital Allowances guide for all member firms of the Independent Commercial Property Agents Network (PAI) for which Veritas Advisory are the recommended Capital Allowances advisor.

4 Simple Steps to Reduce Income Tax

27 May 2020

The practical aspects of partnerships and individuals claiming on historic expenditure, if there are any time restrictions to submit a claim and how to overcome potential barriers such as lack of supporting detailed cost information are often unclear. We set out 4 simple steps to follow in order to realise these tax savings

4 Simple Steps to Reduce Corporation Tax

27 May 2020

Companies are often unclear on the practical aspects of claiming against historic expenditure, if there are any time restrictions to submit a claim and how to overcome potential barriers such as lack of supporting detailed cost information. We set out 4 simple steps to follow in order to realise these tax savings

Single Purpose Vehicles (SPVs) are able to enhance the amount of tax relief when selling an asset by claiming a balancing allowance. Often overlooked, the simple example shown below demonstrates why Capital Allowances should be considered by all SPVs to offset both current and future tax liabilities.

An investor creates an SPV to forward fund an office development for £5million.

After 2 years of rental income of £400,000 per annum, the SPV receives an offer and sells for £6million, closing the company and ceasing the trade.

The interest and other associated acquisition costs equal the rental income for the first 2 years, so there has been no taxable profit on income during ownership.

However, assuming there are £1million of capital allowances available within the property the following tax relief can be realised.

Land purchase                                                                                          £1,000,000

Construction Cost                                                                                  £4,000,000

Total Development Cost                                                       £5,000,000

 

Tax Computation On Sale Without Capital Allowances (Year 3)

Sale proceeds                                                                                           £6,000,000

Less, base cost of development                                              (£5,000,000)

Gross Profit on Sale                                                                £1,000,000

Tax Due @ 19% corp tax rate                                                     (£190,000)

Net Profit on Sale                                                                      £810,000

 

However, £1,000,000 of Capital Allowances have been identified within the property.

Tax Computation On Sale With Capital Allowances (Year 3)

Sale proceeds                                                                                          £6,000,000

Less, base cost of development                                              (£5,000,000)

Gross Profit on Sale                                                                £1,000,000

Capital Allowances Balancing Allowance                     (£1,000,000)

Taxable profit after Capital Allowances                            £0

Tax Due @ 19% corp tax rate                                                      (£0)

Net Profit on Sale                                                                      £1,000,000

 

Increased Return on Investment                                 £190,000

 

The following steps must be taken to claim the capital allowances

  • Appoint CA advisor before transaction takes place
  • Carry out due diligence on all new acquisitions
  • Claim on all current and future expenditure
  • Review all historic acquisitions on current properties
  • Review all historic capex on current properties