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< Back to Latest News Studies Article: Embedded Capital Allowances Explained

Author: Matthew Jeffery, Tax Director

What is capital allowances tax relief?

Essentially, capital allowances tax relief can be claimed on the items embedded within the fabric of a commercial site/building that were acquired with the property purchase.

Qualifying items can include electrical and heating systems, water systems including underground pipework, kitchens and bathrooms, and even the door handles and carpets.

As a statutory UK tax legislation, Embedded Capital Allowances Tax Relief is available to all properties that are used for ‘business purposes’. Whilst there is no definitive list, we regularly help businesses from B&Bs, Guest Houses and Furnished Holiday Lets to Offices, Nurseries, Pubs, Restaurants and many more.

Furthermore, it does not matter if the property was not formerly used for business purposes, whether the building was purchased a long time ago, or even if the original fixtures have since been repaired or replaced – you could still be entitled to claim this specialist tax relief.

Could making a claim negatively affect my business or property value in the future?

Claiming capital allowances is an income or corporation tax adjustment only. It has no effect on your financial accounts, or the market value of your property. Nor does making a claim have any effect on your future capital gains tax bill should you ever decide to sell your property.

Why haven’t I heard about this before?

Claiming tax relief on embedded fixtures is a specialist area of capital allowances taxation that is widely overlooked or misunderstood. It’s not new and it’s not a tax scheme; it’s just historically only been claimed by the large scale businesses and property investors, until now.

In fact, most property owners and their accountants are completely unaware of the full entitlement owed to them. As an estimated 8/10 business properties contain unclaimed tax relief for embedded fixtures, it’s likely your property has tax savings amounting to thousands of pounds locked within.

To shine a light on the unclaimed tax savings in your commercial property or site, get in touch!