When you buy long-term assets for your business such as property you cannot claim the expenditure through the Profit and Loss Account. However, based on the expenditure you may be able to claim Embedded Capital Allowances in accordance with The Capital Allowances Act 2001.
Capital Allowances provide tax relief to deduct the cost of certain assets from taxable profits. This relief is generated following a review of an acquisition and/or capital expenditure on commercial property.
- Purchase of an old or newly built property
- Construction of a new property
- Building alterations, extensions and refurbishments to a property
- The fit out of let property
Capital Allowances are available for all individuals and businesses that are UK taxpayers. The relief can be as much as 40% of the cost of a property and higher for alterations, extensions and refurbishment, If you bought or undertook that expenditure in the last two years the relief may well be immediately available.