Frequently Asked Questions.
Claiming on embedded fixtures is easy, if you have the right consultancy.
What are capital allowances on property?
Capital allowances are a form of tax relief that allow businesses to deduct qualifying capital expenditure on plant and machinery from taxable profits, including qualifying assets within commercial property.
Who can claim capital allowances?
Businesses, companies, and commercial property owners who incur qualifying capital expenditure or purchase commercial property may be entitled to claim capital allowances.
Can capital allowances be claimed on property purchases?
Yes. When a commercial property is purchased, part of the purchase price may relate to qualifying plant and machinery already within the building, which can be claimed as capital allowances. Not all properties qualify, and property purchase claims are time sensitive.
Why are capital allowances often missed by accountants?
Capital allowances on property cannot be identified from accounts alone and require specialist analysis of the building itself, which is outside the scope of standard accounting work.
Can my accountant claim capital allowances on property?
Accountants manage tax compliance, but capital allowances on property require specialist building surveys and technical analysis that accountants are not trained or insured to carry out.
Can capital allowances be claimed retrospectively?
Yes. Capital allowances can often be claimed retrospectively on historic expenditure or previous property purchases where allowances were not identified at the time.
Do capital allowances only apply to new buildings?
No. Capital allowances can apply to existing commercial buildings, historic expenditure, refurbishments, and previously unclaimed property purchases.
What information is needed to assess a capital allowances claim?
This usually includes property purchase details, available cost information, and access to the property for a specialist capital allowances survey.
Is a capital allowances survey required?
For property-based claims, a specialist capital allowances survey is typically required to accurately identify and evidence qualifying plant and machinery.
How long does a capital allowances review take?
Timescales vary depending on the size and complexity of the property and also the information that we are provided. On average, our team will take around four weeks to complete comprehensive, diligent capital allowances report.
Will HMRC challenge a capital allowances claim?
HMRC may review any capital allowances report, which is why it is important that claims are prepared with robust evidence and specialist analysis. In the unlikely event of an inquiry, Eureka would defend the filing position and liaise with HMRC.
Can capital allowances be claimed on mixed-use or partly residential properties?
In certain cases, capital allowances may be claimed on the qualifying commercial elements of mixed-use properties, subject to the specific circumstances.
What happens to capital allowances when a property is sold?
The capital allowances position should be considered during a property sale to ensure allowances are dealt with correctly and efficiently.
Are capital allowances a one-off benefit?
No. Unused capital allowances can often be carried forward and set against future taxable profits, depending on the taxpayer’s position.
Do refurbishments and improvements qualify for capital allowances?
Qualifying capital expenditure incurred on commercial property refurbishments and improvements may be eligible for capital allowances.
Will claiming capital allowances affect my Captial Gains Tax (CGT)?
Claiming capital allowances does not affect CGT in most cases. It only comes into play if you later sell the property at a loss, where a balancing charge can marginally reduce the allowable capital loss, but there is no CGT downside where a gain arises.
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