Property owners may be missing out on valuable tax reliefs available through capital allowances and could make substantial tax savings by reviewing their options.
Capital allowances aim to give businesses tax relief by allowing a business to write off a proportion of the cost of qualifying assets over a number of years against the taxable income of the business.
Buildings themselves do not usually qualify for capital allowances but plant and machinery used by a business such as lifts, heating, electrical and cold water systems and air conditioning may qualify for allowances.
The availability of allowances will depend on whether the business is the owner of the qualifying assets. This can be less straightforward to establish in a landlord and tenant situation and further advice may be needed to confirm any availability.
Capital allowances can survive a sale of the assets they relate to. When a property is sold, the allowances that may be available to the buyer will depend on the tax history of the property and the allowances claimed by previous owners. It is important that the positon is investigated as soon as possible and prior to exchange of contracts.
For a buyer to claim allowances going forwards, a capital allowances election must be made between the buyer and seller on completion of the sale. If no election is made, any future tax reliefs for the buyer will be lost.
Thomson Snell & Passmore will raise the necessary enquiries to establish the capital allowances position on any commercial property transaction. We can also ensure that any election between the buyer and seller is properly documented to preserve future claims.
Please contact Sophie Ogilvie or any member of the commercial property team for further information.