Skip to main content

THE CAPITAL ALLOWANCE ACT 2001

WHAT ARE CAPITAL ALLOWANCES

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.

THE CAPITAL ALLOWANCE ACT 2001

UNDER-UTILISED COMMERCIAL PROPERTY TAX RELIEF

The Capital Allowances Act 2001 is an Act of the Parliament of the United Kingdom that governs how capital allowances are deducted from income taxable under the Income Tax Act 2007 and the Corporation Tax Act 2009.

Capital Allowances are a form of corporation tax or income tax relief for some, but not all, capital expenditure. A business will reduce, or write down, the value of many of its capital assets in its accounts year by year using a process known as depreciation or amortisation.

Through an amended personal or corporation tax return, we can replace depreciation with capital allowances, which can be used to reduce taxable profits as well as produce a tax rebate.

Tax relief is not generally given in full at the time the expenditure is incurred, but instead is spread over a number of years. Different types of expenditure attract allowances at different rates. This is because capital allowances, broadly speaking, take the place of depreciation charged in the commercial accounts.

Allowances are available for expenditure on:

  • Plant and machinery
  • Industrial buildings
  • Agricultural buildings
  • Research and development
  • Mineral extraction
  • Know-how

Capital Allowances give taxpayers relief for certain kinds of expenditure. The Act deals with who gets relief for what expenditure, when and how.

Not all assets qualify for allowances; for instance, expenditure on land does not generally qualify. The most common type of allowance is that on plant and machinery.

Capital Allowances are optional but must be specifically claimed. The nuances of the act require experts in identifying and valuing these items. This is why HMA Tax works with thousands of commercial property owners each year in claiming Embedded Capital Allowances.

PARTNER WITH EXCELLENCE

THE UK'S LEADING CAPITAL ALLOWANCE SPECIALISTS

With over 7,000 claims completed, HMA Tax is trusted by thousands of commercial property owners, Accountants & Solicitors across the UK.

Our service is guaranteed to be fully HMRC compliant, meaning our clients have peace of mind when claiming their Capital Allowances with the UK’s leading independent specialist.

We regularly handle Embedded Capital Allowance claims for commercial property owners and property professionals, ensuring that they are processed quickly, efficiently and effortlessly.

Has my accountant already done this?

Probably not. It’s a highly specialised area of tax and requires very specific knowledge of this area as well as a specialist team that includes an experienced surveyor and Chartered Accountant.

Will this affect Capital Gains Tax (CGT) on my property?

No, Capital Allowance claims do not effect the value of your property and have no impact on your Capital Gains position.

In fact, when buying or selling commercial property, a Capital Allowance claim from HMA Tax can have a positive impact on your overall position.

Will this cause a problem with HMRC?

Capital Allowances are part of standard business routines and are therefore claimed each year against cost clients incur to operate.  HMRC does not take issue with Capital Allowance claims on the basis we adhere to guidelines and the legislation applicable to each claim.

Fortunately, at HMA Tax we have a flawless, 100% success rate with claims we have made to HMRC and have never had an issue completing a claim with HMRC.

Are there any hidden costs?

Absolutely not. We look at claims for you on a results only basis, which means that if we do not find allowances that have been approved by HMRC, then we charge you nothing and any initial costs are covered by us. Our fee is completely linked to a successful outcome, so there is nothing to lose by investigating a potential claim.

CLAIM THOUSANDS OF POUNDS IN TAX RELIEF

ESTIMATE YOUR CAPITAL ALLOWANCE CLAIM IN TWO-MINUTES

Get Started

RECENT CLAIMS

Read our recent industry news and insights, written by our own
Capital Allowance specialists.

Case Studies

How HMA Tax and Host & Stay Delivered £39,600 Tax Relief for Holiday Apartment Owner

A recent collaboration between HMA Tax and Host & Stay has demonstrated just how impactful…
News

The Tritax Big Box-UK Commercial Property Merger: A Sign of the Times in UK REIT Sector

Tritax Big Box's bold move to acquire UK Commercial Property in a near £924M deal…
Featured

Tax implications of buying or selling commercial properties

As a Commercial Property Solicitor, you are required by law (S198 Capital Allowances Act 2001)…