Capital Allowances

Commercial Property and EU Furnished Holiday Lets

Capital Allowances

Capital Allowance, this is the name given to the tax relief available on all UK commercial, UK FHL’s and EEC FHL properties in relation to items that are classified as being part of the intrinsic fabrication of the building.

Experience shows that many commercial property purchases and subsequent developments i.e. refurbishments, conversions & extensions, are conducted without identifying all eligible items of plant & machinery and therefore potential claims for Capital Allowances have been missed.

There is no time bar on this exercise, as long as the items are still in use for the purpose of the trade it may be possible to claim tax relief for expenditure dating back to when the property was first acquired.

Pointers Capital Allowances

• Capital Allowances

• Plant & Machinery

• Moveable / Immovable#

• Installations

Pointers Capital Allowances

• Do You Qualify?

• Tax Payer / Making A Profit

• Affordability – (to pay invoice)

• Original Purchase Price – Minimums

• Subsequent Expenditure

• Location

• Lettings – 140 + 70 days (change)

Items to look for

Items to look for

UK Commercial Criteria

• Is the Company / Individual that owns the property liable for UK tax?

• Was the original purchase price in excess of £400,000?

• Does the individual or the company expect to make a profit this year?

UK-Capital Allowances

We are gearing claims aimed at the initial purchase price and the associated installations

• Plant & Machinery strip out• Heating Installations• Gas Installations• Electrical Installations• Electrical Appliances• Protective Installations• Communications Installation• Security Installations• Hot & Cold Water Installations• Disposal Installations• Ventilation & Air Con Installations• Internal Fittings

FHL-Capital Allowances

Following the April 2009 Budget the tax advantages of Furnished Holiday Let (FHL) status have been extended to cover properties within the European Economic Area (EEA).

For the first time, owners of European FHL's can claim capital allowances. There is only a limited time period to take advantage of this opportunity so owners must act swiftly.

If your FHL is situated in the EEA and is available for commercial letting and you are a UK taxpayer then you are just a few steps away from a potential tax rebate.

FHL-Capital Allowances

We are gearing claims aimed at the initial purchase price and the associated installations

•Heating Installations•Electrical Installations•Communications Installation•Security Installations•Hot & Cold Water Installations•Disposal Installations•Ventilation & Air Con Installations•Internal Fittings•Furniture•Pool

FHL-Criteria

• UK Resident

• Property Located in EU

• Available for let 140 days

• Let for 70 days a year

• April 2011: Changes

• Available for 210 Days

• Let for 105 days a year

• Offset against same business income

Documents

• Product Brochure

• Application Form

• Matrix

• Slide Show

• HMRC Notes

• Guidance Notes

Capital Allowance Process• Check Qualification

• Present Solution

• Complete Application

• (collect survey cheque where applicable)

• Send to Head Office

• Research Carried Out

• Survey Arranged

• Report Produced along with Invoice

• Tax Rebate Applied for by Client Accountant

Survey Fees

UK Commercial£750.00 to £2,500 plus VATPayable with report fee

Furnished Holiday Lets£450.00 to £650.00 plus VATPayable on submission of application

CA-Costing Example

£650,000 Purchase Price £162,500 Allowances Identified (25%)

£34,125 For Limited Company (21%)£81,250 For Higher Rate Tax Payer (50%)

£10,968.75+vat = Client Report Fee£995.00+vat = Survey Fee (UK-FHL)

Members Commission

£650,000 Original Purchase Price £162,500 Allowances Identified (25% guide)£10,968.75 = Client Report Fee£995.00+vat = Survey Fee (UK-FHL)

£2,742.18 = Members Commission (25%)

Members receive = 25% of 6.75% fee

Test Cases

Test Cases

Plant Amount

Disposal Installations £4,101

Water Installations £6,829

Heating & Air Conditioning Installations £29,490

Ventilation Installations £3,855

Electrical Installations £44,897

Communication Installations £14,946

Security Installations £1,025

Fixed Internal Fittings £17,928

Total £123,073

Test Cases

Test Cases

Plant Amount

Disposal Installations £4,398

Water Installations £7,323

Heating & Air Conditioning Installations £31,620

Ventilation Installations £4,135

Electrical Installations £47,610

Protective Installations £858

Communication Installations £15,392

Fixed Internal Fittings £13,702

Total £125,037

Test Cases

Test CasesAPPENDIX B

ANALYSIS OF QUALIFYING PLANT EXPENDITURE  

SECTION 23 LIST 'C' CAPITAL ALLOWANCES ACT 2001  

   

APPORTIONMENT OF ACQUISITION COST  

   

2/2a Old Market Place  

   

Plant Amount

Disposal Installations £1,696

Water Installations £1,752

Gas Installations £1,399

Heating Installations £22,013

Ventillation Installations £2,662

Electrical Installations £23,797

Protective Installations £578

Security Installations £2,152

Internal Fittings £8,207

Total £64,257

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Processing Cases

Capitol Claims Evans Business CentreDane Street Rochdale OL12 6XB

Tel: 0844 873 1050Fax: 0844 873 1040E-mail: info@capitolclaims.co.ukWeb: www.capitolclaims.co.uk

Statement

Everybody who has commercial premises should investigate the Capital Allowance potential that is an inherent part of that property.

Many believe they have already claimed the maximum but we know this is rarely - if ever - true... and it is likely to be thousands of pounds you did not realise you had.