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UK firms are losing billions on capital allowances

View profile for David Baybut
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Businesses are failing to claim tax relief on fittings in commercial properties, experts say, which could save them billions of pounds. Recent research from Deloitte suggests that owners of over 90% of commercial properties in the UK have never claimed capital allowances on plant and machinery within their building. Claims may be made even if the property was bought a decade ago.

By taking advantage of capital allowances, companies can claim tax relief on fittings such as air conditioning, radiators, pipework, cabling, lighting and security systems  - anything relating to the intrinsic fabric of the building.

Capital allowances allow business owners to write off the value of these fittings against taxable income. Common items such carpets, curtains, fire extinguishers are considered plant and machinery, and may be claimed for. However less easy to spot fittings, such as cabling and pipework also qualify. There are specialist companies who will assist, many on a "no claim -  no fee" basis, to identify such tax reliefs, with a detailed knowledge of the less obvious times claimed for, which may yield significant savings or refunds of overpaid tax for previous years.

Capital allowances are available for sole traders, self employed persons, partnerships and companies.

Two case studies are as follows:

Sole trader

Office Building Acquisition cost: £2,060,000

Capital allowances identified: £511,056

Client benefit at 40% tax rate: £204,422


Retail Property Acquisition Cost: £689,250

Capital allowances identified: £68,814

Client benefit at 40% tax rate: £27,525

Stephensons works with a number of capital allowance specialists many of whom will advise you on your entitlement, and will conduct all the detailed analysis and forensic surveys, before producing a report compliant with HMRC. They will do all the work up front and you will not be charged a penny before you receive your first benefit from HMRC. They will in any event happily, chat to you about capital allowances, without charge, before you decide any course of action.

By David Baybut, commercial property partner 

If you would like an introduction then please do not hesitate to contact David Baybut by email: dba@stephensons.co.uk  or call: 01616 966 229.