Capital Allowances Tax Relief provides an important and valuable benefit for businesses and individuals making capital investments.
What are Capital Allowances? Capital Allowances is the main form of tax relief for expenditure incurred on tangible fixed asset investments and enables companies and individuals to offset these costs against the taxable profits of the trade, reducing the amount of corporation or personal tax which is payable. The allowances are usually offset against taxable profits over several years, depending upon the type of allowances claimed.
Guidance on what qualifies for Capital Allowances Tax Relief is legislated in the Capital Allowance Act 2001 (CAA2001).
Asset depreciation is not an allowable deduction when calculating profits for tax purposes (and must be added back to the net profit on the tax return); Capital Allowances Tax Relief can be claimed on most assets purchased for use within the business, ranging from machinery to investments in commercial property.
Depending upon the nature of the asset(s) being claimed for, a specified proportion of the expenditure incurred can be then deducted from the taxable profits (over several years in some cases), so reducing any tax liability and allowing the cash retained to be reinvested in the business.
Who can make a Capital Allowances Tax Relief claim? Limited companies, Partnerships, individuals, tenants, commercial property owners and overseas investment holders in UK commercial properties can all make a Capital Allowances Tax Relief claim.
The types of property which tend to qualify for large Capital Allowances Tax Relief include: Hotels, Care Homes, Dental Practices, GP Surgeries, Veterinary Practices, Offices, Industrial Units, Warehouses, Retail Units, Car Showrooms, Pubs, Restaurants and Petrol Stations.
Qualifying items often include: Heating and Ventilation systems, Lighting, Electrical Installations, Hot/Cold Water systems, Data Installations, Fire Doors, Security/CCTV, Signage, Sanitary Fittings, Telecoms, Lifts/Escalators, Flooring, Windows and Machinery, although this list is NOT exhaustive.
Further information on Capital Allowances Tax Relief is readily available online; however, we would always recommend that you speak to a specialist in this field to ensure that you receive the most accurate and up-to-date information, putting you on the right track to receiving the maximum benefit from your claim.
Innovation Tax have helped their clients secure millions of £’s of unclaimed Capital Allowances tax relief and our specialist expertise and knowledge of the Capital Allowance legislation ensures our clients benefit from the best advice possible.