Use it or lose it!

Changes in the capital allowances rules from 1 April 2014 mean that commercial property owners, whether buying or selling, could lose valuable tax relief forever.

UK commercial property (note – not residential) owners can claim tax relief on items that are fixed to the property and qualify for capital allowances; examples are lighting, heating and air-conditioning systems. Whether the property is held as an investment or is used in their trading business, capital allowances arededucted from profits, reducing the tax bill. We have seen many examples where owners have not taken advantage of this relief and are therefore about to permanently lose out on valuable tax savings.

Time is now running out due to changes that come in from 1 April 2014. From this date, HMRC has introduced additional requirements that need to be met for all commercial property transactions, and if they are not unclaimed allowances will be lost forever.

Post 1 April 2014, if you sell a commercial property but haven't identified the available allowances and claimed them in your tax return, the unclaimed allowances are lost for the seller, the buyer and any future owner of the property.

For commercial property transactions after 1 April 2014, it will become increasingly important for buyers to obtain full information about the capital allowances history of the property before purchase, this will help buyers to maximise the allowances they can claim and therefore sellers to maximise sale value.

It will no longer be possible for a buyer to ignore capital allowances when acquiring a commercial property and then claim the allowances at a later date. The new rules will impose requirements that must be met, as well as agreed between the parties, to avoid the loss of this valuable tax relief.

Contact us (quickly) if you would like assistance to review your portfolio to establish if there are any unclaimed allowances.. If identified and quantified, the allowances can be included in your current tax return and generate a tax saving for you, and avoid the loss of this relief to future owners.

Similarly if you are considering acquiring a commercial property, contact us as we can advise on how the capital allowances position may affect the acquisition.