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Latest Insights

Case Law – Mersey Docks & Harbour Company v HMRC

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

14 Jan 2025

Written by: Clive Curd

Case Law – Changi Airport Loses $273m Tax Break

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

20 Dec 2024

Written by: Tom Lo

Furnished Holiday Lets – HMRC Clarify Legislation

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

07 Nov 2024

Written by: David Gibson

Archive

 

Latest News

Case Law – Mersey Docks & Harbour Company v HMRC

14 Jan 2025

HMRC continue to raise enquiries and to disallow items of plant that could be used for a claimant’s trade. This case relates to the quay wall at the Port of Liverpool

Case Law – Changi Airport Loses $273m Tax Break

20 Dec 2024

Changi Airport Group (CAG) made Capital Allowances claims over three years totalling $272,575,162 on assets including the runways and taxiways but lost with the Court of Appeal determining that the assets were structures and not tools of trade.

Furnished Holiday Lets – HMRC Clarify Legislation

07 Nov 2024

The window to claim Capital Allowances tax relief on furnished holiday lettings (FHLs) is fast decreasing before repeal of the legislation in April 2025 and HMRC have now clarified the transitional rules about who can or can't claim.

New Case Law – Capital v Revenue

04 Oct 2024

A recent important Supreme Court decision in Centrica Overseas Holdings Limited v HMRC addresses the deductibility of expenses incurred by a company. The bar to deduct costs has been raised considerably

HMRC To Increase Scrutiny on Capital Allowances Claims

04 Oct 2024

Not only are Allowances more advantageous than ever before, but HMRC are strategically targeting tax leakage – including through Capital Allowances. Getting the correct advice is essential

100% Full Expensing – What is it and why it’s important

09 Sep 2024

Hailed as the “Greatest Tax Break in History” when it was introduced in 2021, the 130% Super Deduction aimed to take some of the sting away from the hike in Corporation Tax rate that was announced in the same speech. Its replacement, Full Expensing (FE), took over in April 2023 as a slightly less headline-grabby 100% First Year Allowance. But what is it?

Some Good News for Furnished Holiday Let Owners

05 Aug 2024

Positive transitional rules have now been published allowing Furnished Holiday Let owners the ability to use Capital Allowances beyond April 2025

Case Ruling – HMRC v Altrad Services Limited

10 Jul 2024

The decision by the Court of Appeal will have far reaching implications in that it clearly resets the boundaries of what is a capital allowances avoidance scheme designed to increase the quantum of capital allowances claimed

Spring Budget Update

06 Mar 2024

Chancellor Jeremey Hunt announces changes to the capital allowances legislation affecting furnished holiday let owners

Corporate tax rates are set to increase by 30% from April 2023, this means property income and capital gains are exposed to higher taxes, therefore tightening investment margins and cashflow.

Below are three simple ways to improve margins and reduce risk:

1. Acquisitions – Capital Allowances typically increase yields by between 0.25% and 1%

  • Capital Allowances are often overlooked in investment appraisals; however, we have advised on some recent transactions where the identification of available capital allowances has assisted in making the deal viable.
  • Don’t accept a Seller’s Capital Allowances position at face value, even where a £2 s198 election is inherited. Opportunities may be available to claim due to timing of expenditure, tenancies, tax positions or specifics of the Capital Allowances legislation that many are unaware of.
  • Always ask for a second opinion on the legal position; there are no costs for our initial legal entitlement checks or advice.

2. Asset Management – Reduce Cost of Energy Efficiency Requirements

  • From April this year commercial buildings must achieve a minimum ‘E’ efficiency standard. From 2028 it is proposed that rating will be ‘B’.
  • Capital Allowances can typically reduce the net cost of capital expenditure by up to 45% for Partnerships and individuals and 25% for companies, 
  • It is not widely understood that using a Capital Allowances specialist can typically identify up to 50% more Capital Allowances than their accountant.

3. Reduce Risk – Capitalised Expenditure v Profit & Loss

  • Many clients write off 100% of their construction expenditure in the P & L and not as capital, this is technically incorrect and increases the chances f an HMRC enquiry.
  • GAAP requirements mean that building projects and associated professional fees must be capitalised where there are any works capital in nature, such as improvements, changes or additions.
  • Only individual works which are a direct repair or replacement qualify as capitalised revenue and can be allocated to the profit and loss; detailed analysis of all building projects will correctly account for the works, maximising savings and reducing risk.

Action Points 

Contact Veritas Advisory for free initial advice on the following:

  • Acquisitions – Estimates of Capital Allowances and advice on legal entitlement to claim.
  • Asset Management – Estimates of Capital Allowances and cash flow forecasts on developments, fit outs and refurbishments