If you’re looking to make tax savings from your property expenditure, you need to get to grips with capital allowances offered by HMRC.
But understanding the changing rates and how to maximise them is a time-consuming and relentless task, particularly when the allowances are so project-specific and therefore very few people have the knowledge and experience of applying them on a regular basis.
From identifying qualifying plant and machinery elements (heating, electrics, fittings) to applying the correct level for the type of project (commercial construction, alterations, refurbishments), there’s a host of factors to take into account.
That’s why our specialist team makes capital allowances their focus, combining skills in tax and property to prepare claims that will generate the greatest possible savings in the least possible time.
Capital Allowances in 2018/19
Manufacturing sector CA claims
AIA Claims Increase since 2017/18
The new Super Allowance
Azets’ capital allowances and tax specialists provide advice to individuals and businesses on how to maximise tax savings when undertaking property projects such as new construction work or when buying existing buildings. Completed the project? No problem. We frequently make retrospective claims.
We’ve helped many clients to benefit from considerable additional tax savings when constructing or acquiring a property. Our service is fast and hassle free, with very little information needed to produce results.
With a rare combination of skills in surveying and tax, our expert team will identify, quantify, and maximise the qualifying elements on projects, even where little or no cost information exists.
Here are some of the ways Azets’ capital allowances specialists support the many clients we work with on a daily basis:
Of course, your business and needs are unique, so get in touch to discuss how we can help today.
In order to incentivise business investment and fill the void left by the removal of the super deduction in March 2023, ‘full capital expensing’ has come into effect for at least the next three years.
Businesses will now receive up to 25p of tax relief for every £1 invested into qualifying main pool assets (IT equipment, plant or machinery).
As a result of measures announced in the Spring Budget 2023, businesses will now benefit from:
The Annual Investment Allowance (AIA), which provides 100% first-year relief for plant and machinery investments up to £1 million, is also available for all businesses including unincorporated businesses and most partnerships.
Full expensing is a 100% first-year allowance which allows companies to claim a deduction from taxable profits equal to 100% of their qualifying expenditure in the year that expenditure is incurred.
Expenditure must be incurred on the provision of “main rate” plant or machinery on or after 1 April 2023 but before 1 April 2026.
Full expensing is available to companies subject to Corporation Tax only. Therefore, unincorporated businesses cannot claim, but such businesses are entitled to claim the AIA which offers the same benefits as full expensing for the investments it covers (up to £1 million per year).
The plant and machinery must be new and unused, must not be a car, given to the company as a gift, or bought to lease to someone else.
Expenditure on second-hand assets and those bought to lease to someone else can still qualify for the AIA.
For “special rate” expenditure (typically integral features such as lighting, electrical systems and HVAC), which doesn’t qualify for full expensing, a 50% first-year allowance can be claimed instead, subject to the same conditions that apply for full expensing.
This means that a company can claim a deduction from taxable profits that is equal to 50% of their qualifying expenditure in the year that expenditure is incurred. Capital allowances can be claimed on the balance of expenditure in subsequent accounting periods at the 6% rate of WDAs for special rate expenditure.
A company incurs expenditure on a new state-of-the art production line including £10 million on various items of main rate plant and machinery.
In addition, the company spends £2 million installing a brand-new electrical system, which is special rate expenditure.
Because of the new full expensing and 50% first-year allowance, the company can claim £10 million under full expensing and £1 million under the 50% first-year allowance in the year the expenditure is incurred. The remaining balance of £1 million can be added to the special rate pool in a subsequent accounting period.
Whether you’re undertaking or have already undertaken a construction project or property acquisition, we can help.
We regularly work with businesses and individuals who are typically spending in excess of £200,000 on building projects, helping them to maximise their capital allowances and make significant tax savings.