Legislative requirements and market demand are driving the need for buildings to become more sustainable in terms of construction and operationally. Here we explain how capital allowances can help to offset the cost of refurbishing existing buildings to achieve higher green building standards.
Building design is increasingly looking at innovative ways to deliver greener buildings and the different building design options which provide the most cost effective outcome in hitting the desired rating.
The tax relief provided by claiming capital allowances by the entity that incurs the expenditure is often overlooked. By factoring in the capital allowances to help ‘pay back’ some of the cost, is increasingly important to assist in the feasibility of these projects.
Capital allowances provide some form of tax relief against most types of building works, here we consider a selection:
Thermal insulation to existing buildings
This can take many different forms from replacing single glazing to double or triple glazed units to over roofing or cladding. All these measures attract thermal insulation allowances providing it can be shown to improve the building’s u-value.
Electricity consumption
With the cost of utilities going up, building owners and occupiers are looking at cost effective ways to reduce energy consumption and to future proof their buildings. This could be through replacing lighting to LEDs, adding intelligent controls and adding photo voltaic panels. All these building measures qualify for integral features where they form part of the ‘trades’ electrical system.
Heating & Cooling
The way buildings are heated and cooled are too many to list for this article, but increasingly building owners and occupiers are considering non fossil fuel solutions which for existing properties can be challenging to incorporate. Building efficiencies into existing systems is often a first consideration. Adapting more efficient boilers or moving to electric heating, ground source heat pumps and CHP, are all options that can deliver greener accreditation.
Solar shading can be installed to reduce the solar gain to reduce the buildings demand for cooling and can come in the form of a separate fixed overhang, or part of the cladding design.
Each of these measures qualify for some form of capital allowance, typically integral features. Claims can be increased further by including the associated builders works, preliminaries and certain professional fees, which can be apportioned to the specific qualifying plant items.
In the autumn statement it was confirmed that the annual investment allowance will remain at £1m and is available for individuals, partnerships and companies which based on a corporation tax rate of 25% will provide up to £250,000 of tax cash savings, or £450,000 for partnerships and individuals.
To understand more about how capital allowances can help to offset the cost of office refurbishments, please contact one of the directors.