Capital Allowances

Do you own commercial property or furnished holiday lets (FHLs)? At Elite Financial Accounting we help you understand and utilise capital allowances to achieve significant tax savings for your property business.

Understanding capital allowances

Capital allowances allow property owners to deduct the cost of certain assets from their taxable profits. These assets, known as 'plant and machinery,' can include items such as heating systems, security equipment, and other integral features of the property.

When done correctly, capital allowances can be reclaimed from taxes paid in previous years, leading to a potentially large tax refund.

Structures and Buildings Allowances (SBA)

The SBA lets you claim a deduction on the costs of construction, renovation, or conversion of non-residential structures and buildings. You can claim 3% per year over 33 1/3 years, helping to reduce your taxable profits over time.

Claiming capital allowances

To fully utilise your capital allowances, it's essential to identify all qualifying expenditures accurately. This includes:

• Plant and machinery: Items like heating and air conditioning systems, lighting, and security systems.
• Integral features: Such as electrical systems, cold water systems, and lifts.

• Renovation and construction costs: Including fees for design, preparing the site for construction, and fitting out works.

Capital allowance survey

To uncover additional claimable expenses, your accountant should collaborate with a surveyor to conduct a capital allowance survey report. These reports can identify items not evident in the paperwork, revealing potential tax relief opportunities in unexpected areas.