Are you claiming all of the capital allowances that you can?

The entitlement to capital allowances is an area of tax that is often overlooked by landlords and tenants alike. It has its own regime, distinct from the rules that apply to capital gains and income. It is not wrong not to have claimed allowances: but you may have paid more tax than was necessary.

Landlords could be entitled to claim capital allowances if they are:

• Buying a building that contains plant and machinery (any office block, for example)
• Building or refurbish commercial property
• Paying a contribution to a tenant’s fitting out which includes expenditure on plant and machinery (such as air conditioning)

Tenants could be entitled to claim capital allowances if they are:

• Carrying out refurbishment to property that they occupy
• Making a payment to the landlord in respect of a dilapidations claim at the end of a lease

When buying, selling or letting a building, it is worth thinking about capital allowances in good time. If selling, for example, the seller may be able to revise previous tax returns to include a claim for capital allowances.

Even if you are not contemplating any transactions, or expenditure, it may be worthwhile reviewing previous activity to see whether there is an opportunity to reduce your tax burden.

For more information, please contact Paul Brame.

Commercial Property Newsletter - 25 March 2011