Talking Tax: July 2022
Author: Matt Jeffery, Managing Director
June was an exciting month for the capital allowances team.
We were also delighted to be able announce our partnership with Sykes Holiday Cottages. The strategic partnership will enable Zeal to unlock significant tax savings through capital allowances for Sykes holiday let owners.
The capital allowances team completed claims for 36 different clients in June, unlocking over £4m in unclaimed tax relief. Below is a summary of three interesting cases we worked on:
Purchase of Building – New Record Claim!
We had a new record for Zeal this month. Usually around 20% – 30% of a purchase price of a building qualifies for capital allowances. However, we completed a claim this month where 91% qualified!
The light industrial building was purchased by our client direct from the developer. As a result, our client is the first owner of the building. This meant our client could claim Structures & Buildings Allowances (SBA’s). SBA’s give tax relief for the structural elements of a building that would not normally qualify for tax relief. SBA’s were introduced in 2019 as an additional capital allowance for investments in buildings. SBA’s, however, only apply to ‘new’ expenditure on buildings (excludes land) and so are commonly claimed on refurbishment and construction projects. SBA’s can only be claimed on the purchase of new buildings acquired directly from the developer or, buildings that have been refurbished by a developer.
Capital Allowances Review – Holiday Lets
Zeal carried out a capital allowances review for a company that owned two high value holiday lets in Dorset. The ex-residential properties were acquired in 2019 and 2021. The first property was extended in 2020 and the new property was refurbished and a loft conversion added. Zeal reviewed the capital expenditure incurred to identify missed claims for capital allowances on the purchase, extension and refurbishment of the buildings. No tax relief had been claimed to date.
Following the site surveys (which had to be done on a Saturday), and after liaising with the contractors to obtain cost breakdowns required, we were able to identify over £500k of expenditure qualifying for capital allowances. This will generate total corporation tax savings of at least £95,000. An immediate cash repayment in excess of £13,000 was also received. Both the client and the accountant that referred the case to Zeal were delighted with the results.
Capital Allowances Claim – Childcare Nursery
As members of The National Day Nurseries Association, Zeal help owners of children’s care and nursery properties to claim capital allowances on their investments in their buildings. Last month, we achieved a fantastic result for a nursery owner. They had purchased the main nursery building 12 years ago for £322k and spent £250k a few years later to extend the building. They also incurred £100k to build an additional nursery building on site 3 years ago.
Following a site survey by one of Zeal’s capital allowances surveyors, we were able to identify that £79k of the £322k purchase price qualified. As the extension and construction works were completed several years ago, there were no detailed records of the build costs, and they could not be obtained from the contractor. Zeal’s team of experts were able to assess the costs of the building works and provide a tax analysis of the costs that would be accepted by HMRC. This generated a further £119k of capital allowances. The total capital allowances identified of £188k will result in total tax savings of £75k and generated a cash repayment of £21k.
Our team started the month by exhibiting at the Introbiz Expo in Cardiff City Stadium, meeting business owners from all industries and showcasing how they could take advantage of unclaimed tax relief to cut their July POA plus generate future tax savings to reduce their HMRC payments for years to come.
For the second year, Zeal has also entered the Fast Growth 50, aiming to once again make the list of the most rapid growing companies in Wales. Placing 7th in 2021, we hope to repeat our success and make the list – fingers crossed!
As Zeal continues to grow, so does our need for skilled professionals. To support and increase growth, we are looking to expand our team and are recruiting in our tax and sales departments. If you would like to know more about these opportunities available or know someone who is looking for their next challenge, please contact us on 01633 287898.