Capital Allowances is a legislative (CAA 2001) form of depreciating certain qualifying assets including Plant and Machinery and Structure. Plant and Machinery Allowances and Structural Building Allowances* apply to capital expenditure incurred on the acquisition, construction, refurbishment and fit-out of all types of commercial properties.
Capital allowances in the UK are becoming ever more complex and intricate.
Our team possesses the range of specialist interdependent skills, covering surveying, legal and fiscal disciplines, which are essential to ensuring total maximisation and prompt approval of a claim by HM Revenue and Customs (HMRC) or the Valuation Office Agency (VOA).
Capital Allowances are claimed through the self-assessment system and whether a company or individual they are used to reduce taxable profit and therefore reducing taxable liabilities. In certain cases, they can result in cash back from HMRC.
Allowances can be claimed retrospectively meaning if the asset is still in use there is no expiry date to claim.
The rate of depreciation of qualifying asset are determined by which pool they fall into. The pools are depreciated on a written down basis (except Structural Building Allowances) and are as follows:
- Main Rate Pool – are written down at the rate of 18% per annum and includes items such as carpets, sanitary ware, signage, ambient features and, fixed furniture.
- Special Rate Pool – are written down at the rate of 6% per annum and includes items such as Heating Ventilation and Air Conditioning Systems (HVAC), Building Management Systems (BMS), lighting, lifts, general power, and hot and cold water.
- Structural Building Allowances** – These allowances are written down at 3% per annum on a straight-line basis and include items such as structural frames, elevations, floors, walls, and ceilings.
Aside from correct pool allocation when claiming, other areas to consider are; Fixed Asset Requirement rules, Annual Investment Allowances, Super Deductions, capitalised repair and renewals, professional fees, works incidental to a qualifying activity, and short life assets.
With Capital Allowances becoming more and more complex and compliant, the need for a specialist is more prominent than ever.
The experienced team at Charterfields will work with your finance and project teams, and through correct tax planning, due diligence, collation, and reporting, we will ensure that all allowances and savings are maximised.
* Structural Building Allowances only apply to expenditure contractual committed after 29th October 2018.
**The amount of Structural Building Allowances claimed reduce the base cost of the asset and claiming should be carefully considered.