Do you own a commercial property?
If yes, you will have incurred a large expenditure to your business that has been allocated to your business Balance Sheet. Capital Allowances are a tax relief based upon the value of items found within the balance sheet figures.
How can I benefit?
Capital Allowances allow UK property owners to deduct a portion of their expenditure from their taxable profits, directly impacting their tax payments in a beneficial way.
Immediate tax reduction
Capital Allowances provide immediate relief by reducing the year’s tax bill, improving cash flow, which is particularly beneficial to businesses that have just incurred such a large expenditure.
Enhanced profitability
By lowering taxable income, Capital Allowances can significantly enhance the profitability of your business, freeing up capital for reinvestment or to cover operating expenses.
Investment incentives
Capital Allowances act as an incentive for businesses to invest in the UK property market, especially in qualifying fixtures, features, and energy-efficient technology.
Budget predictability
Knowing that you can claim these allowances allows for more predictable financial planning and budget management across the fiscal year.
What types of tax relief are available?
The UK’s tax system offers various forms of relief to businesses through Capital Allowances, designed to encourage investment and development in the commercial real estate sector.
Plant & Machinery Allowances (PMAs)
This allowance permits specific elements of a commercial building to be claimed and written off at a current rate of 18% per annum on a reducing balance basis. (Don’t worry about the technical term. Your accountant will know what to do with the figures!)
Integral Features Allowances (IFAs)
This allowance permits specific elements of a commercial building to be claimed and written off at a current lower rate of 6% per annum on a reducing balance basis.
Annual Investment Allowance (AIA):
This allowance permits a 100% write-off on qualifying plant and machinery and integral features costs up to a specified annual limit within the first year.
Enhanced Capital Allowances (ECAs):
Some Energy-saving or particularly environmentally friendly equipment, as defined annually by the Chancellor, can also attract 100% tax relief in the first financial year.
Structures and Buildings Allowance (SBA):
Recently introduced but not strictly Capital Allowance, the SBA allows for a write-off of construction and renovation costs of non-residential structures and buildings over a 34-year period.
Chat with us today in a free, no-commitment assessment to ensure you can fully benefit from capital allowances for your new property development.
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Get the tax relief you are entitled to
If you need the help of a tax consultant to identify what tax relief you are eligible for on your commercial property, contact us today to have a no obligation chat.
