Talking Tax: March 2023
Author: Matt Jeffery, Managing Director
After another manic January, February was unusually busy for the capital allowances team. In addition to liaising with HMRC to process all the claims submitted in January, our team assisted 21 different clients to identify claims for capital allowances, unlocking over £1.6m in unclaimed tax relief. This will result in cash tax savings for our clients of at least £320,000!
Below is a summary of some of the cases we worked on:
Children’s Nursery – Stockton on Tees
Our client purchased a residential property in 2001 and changed its use to a children’s day care nursery.
Purchase price = £267,800.
CA’s identified = £69,457.
Total tax savings = £29,171 (higher rate tax payer)
Refund of £11,433.
Landlord Portfolio Review – South Wales
Zeal carried out a capital allowances review of historical property acquisitions by a landlord. The landlord’s portfolio contained a mixed of standard BTL’s, commercial properties and serviced accommodation. Zeal identified 3 properties that qualified for capital allowances and produced the following result:
Total purchase price = £605,500.
CA’s identified = £44,704.
Refund of £16,052.
Future savings = £0*
*As the client used the cash basis method of accounting, the tax savings were all received in the tax year the claim was made.
Hotel Purchase in Blackpool
Our client purchased a hotel in Blackpool in 2013.
Purchase price = £294,825.
CA’s identified = £99,611.
Refund of £6,786.
Future savings = £28,588.
Retrospective Capital Allowances Claims
We are often asked how a capital allowances claim can be made now for expenditure incurred several years ago. In short, any unclaimed capital allowances can be included in the earliest open tax return for the owner. If the legal owner is an individual, the claim would be made in the earliest open self-assessment return. For companies, the claim would be made in the earliest open corporation tax return.
For individuals, the deadline to submit an amendment to a 2020/21 personal tax return passed on 31 January 2023 so retrospective claims for capital allowances will now be made in amended 2022/23 tax returns. Amendments can be made up until 31 January 2024.
For companies, there is a two year time limit for the end of an accounting period to amend a corporation tax return. Zeal’s team will be busy next month submitting amended corporation tax returns for year ended 31 March 2021 by the 31 March 2023 submission deadline.
For help with Embedded Capital Allowances or Specialist Tax Advisory, please contact Zeal on email@example.com or 01633 287898.