Talking Tax: April 2023
Author: Matt Jeffery, Managing Director
March was another busy month for our capital allowances team. This was driven mainly by companies that needed to submit claims for tax relief before the 31 March deadline.
In summary, last month our team assisted 28 different clients to identify claims for capital allowances, unlocking over £3.9m in unclaimed tax relief. This will result in cash tax savings for our clients of at least £780,000!
Below is a summary of some of the cases we worked on:
Capital Allowances Review – Shop Fit-Outs
Zeal carried out a capital allowances review of the expenditure incurred to refurbish and fit-out coffee shops/restaurants. In summary, of the £1.5m expenditure incurred, our review identified £544,640 qualifying for capital allowances. This will equate to total corporation tax savings of at least £103,481.
Construction of a Holiday Let
Our client had incurred approximately £1.8m to build a large residential property for use as a furnished holiday let in Bude (Cornwall) between 2020 & 2022. Following a detailed review of the construction costs and associated professional fees, Zeal were able to identify £568,219 of expenditure qualifying for capital allowances. This will equate to total corporation tax savings of up to £142,054.
Purchase Claims
Claiming capital allowances on the purchase of a property used for business purposes can generate significant tax savings. As these claims require the skills of Quantity Surveyors as well as capital allowances specialists, claims are often missed.
In addition, there are many misconceptions from professional advisors. These include things such as “its too late to make the claim” or, “it will affect Capital Gains Tax (CGT) when you sell” or, “there will be a claw back of the tax relief when you sell”. None of these are true!
Here are some examples of some purchase claims our team completed in March 2023:
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Purchase of Pub in Exeter
Purchase price = £769,600 (July 2006). CA’s identified = £253,014. Refund of £14,113. Future tax savings = £57,449.
Purchase of Guest House in Weston-Super-Mare
Total purchase price = £242,400 (March 2004). CA’s identified = £62,872. Refund of £4,991. Future tax savings = £11,659.
Purchase of a Dog & Cat Boarding Property in Surrey
Purchase price = £272,950 (September 2011). CA’s identified = £58,203. Refund of £2,194. Future tax savings = £12,041.
If you own a commercial property or holiday let, or have clients that do, contact Zeal to find out if you are sitting on thousands of pounds in unclaimed tax relief.
Spring Budget – Full Expending of Capital Expenditure
The Spring Budget announced a major change to capital allowances, with the headline ‘Full expensing of Capital Expenditure’! Whilst the headline sounds exciting for tax advisors, once you get into the detail, it may not be as it seems!
Zeal have reviewed the draft legislation that has now been published and prepared a summary of the key points you need to know.
Stamp Duty Land Tax – Have you overpaid on the purchase of a second property?
Stamp Duty Land Tax (SDLT) is a fixed tax paid by property buyers in England. In Scotland, it’s called the Land and Buildings Transaction Tax (LBTT) and in Wales, Land Transaction Tax (LTT).
In April 2016, a surcharge was applied to the purchase of second homes or residential properties purchased in a company. The surcharge applies to residential properties purchased for over £40,000 and ranges from 3% to 4%, depending on the country the property is situated in.
Following the success of a case brought before the FTT in 2020, second properties that were not suitable for use as a dwelling at the time of purchase, should not be subject to the SDLT surcharge. As a result, taxpayers have unwittingly overpaid SDLT on properties that were uninhabitable when purchased.
Zeal’s SDLT specialists have been assisting clients who have overpaid SDLT. In most cases, the SDLT paid is refunded in full or the non-residential rates calculation has resulted in significant refunds of the SDLT paid.
If you or your company has paid the SDLT surcharge in the last 4 years and the property was not suitable to live in at the time of purchase, contact the team at Zeal to see what you could be owed.
For help with Embedded Capital Allowances or Specialist Tax Advisory, please contact Zeal on hello@gozeal.co.uk or 01633 287898.
You may also like to read
Newsletter: Capital Allowances Update (Issue 1)
Newsletter: R&D Tax Credits Update (Issue 2)