What is the Capital Allowances Search?
Undertaking Capital Allowance checks on commercial properties can identify if your clients are eligible for tax benefits of up to 20% off the property purchase price. This tax benefit could save tens to hundreds of thousands of pounds for your client. As a generalisation most commercial properties or multiple occupancy buy to let residential properties are eligible for the tax benefit.
Why do I need a Capital Allowance report?
The report ascertains the potential Capital Allowance and provides a definitive opinion for your client’s property transaction. The report doesn’t require the solicitor or the client to hold specialist tax knowledge and comes complete with a certificate highlighting the potential for Capital Allowances. Should your client’s property be eligible for this tax relief, our partners PlanVal have specialists on hand to ensure claims are supported by experienced tax accountants, Surveyors and HMRC.
The right to claim is statutory in accordance with the Capital Allowances Act 2001 (CAA2001) but the tax deductions are not automatic. Claims have to be submitted via tax returns and most clients (Individuals and small to medium sized enterprises – SMEs) will not have claimed everything they are entitled to.
£50 + VAT
How to Order
Click the New Orders button to order. The check can be found within the commercial searches section.
1. Capital Allowances are essentially the tax equivalent of depreciation. Due to the way in which they are calculated, they are not automatically applied to Company Accounts. They need to be identified, assessed and claimed manually.
2. This form of tax relief has been around since 1878.
3. Anyone who owns a qualifying property is entitled to make a claim under legislation (CAA2001); it’s not a fad or legal loophole.
4. According to HMRC, 96% of commercial properties are eligible for Capital Allowances.
5. As much as £10,000 in tax relief can be recovered for every £100,000 spent on property.
6. Tax returns for the preceding 2 years can be amended retrospectively to include Capital Allowances.
7. Capital Allowances can be used against any taxable income – if you own a property, you can use the Capital Allowances against PAYE income tax on a job. The tax refund will be paid through your employer.
8. Claiming Capital Allowances does not affect your Capital Gains Tax, it won’t reduce the base cost of the property nor its overall value.
9. Second homes and holiday lets (located within the UK or EEA) are eligible for Capital Allowances. Criteria of the property being available to let for at least 201 days per year and being let for at least 105 days must be met to make a claim. The tax relief will only apply to holiday let businesses.
10. Capital Allowances can be transferred from one property owner to another if the prior owner is not able to claim. Only tax payers are eligible for Capital Allowances, which excludes Local Authorities, Charities, Pension funds etc.
Why not recommend a Capital Allowance check for your client’s next commercial property purchase?
If you have any queries about Capital Allowance or any of our products, please contact us.