If you own the property that you trade from, for example a hotel or guest house, the purchase price of the property may have included the cost of certain integral features that it may be possible to submit a claim for capital allowances.
The Finance Act 2012 included provisions that affect the ability to make such a claim and we are now in a transition period ending in April 2014. Accordingly, we recommend that if you think you may be affected to contact us to discuss how the change in rules will affect you and whether a “late” claim for capital allowances can be made if you have not already made a claim.
What sort of integral features can you claim for?
The rules that define what can be claimed vary from business to business. Usually, it should be possible to claim for items that are used in the running of the business. For example: heating systems, security systems, general power, and fire alarms.
HMRC defines integral features, eligible for plant and machinery allowances, as:
- An electrical system (including a lighting system),
- A cold water system,
- A space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system,
- A lift, an escalator or a moving walkway,
- External solar shading
HMRC’s guidance goes on to say that:
“…the new definition does not extend to any asset whose principal purpose is to insulate or enclose the interior of a building, or to provide interior walls, floors or ceilings which are intended to remain permanently in place.”
What are the advantages of making a claim?
A back dated claim for capital allowances will reduce your tax bills, possibly for a number of years, and if tax has already been paid for those years then you should receive refunds.
Further, if you fail to make this type of claim it may affect the valuation of your business in the event of a future sale since the ability of a purchaser to claim allowances may be restricted.
If you have never explored the possibility that tax allowances may be locked away in the cost of the building you own, and trade from, we would be happy to take a look on your behalf. Time is running out. As mentioned above, you should consider this before April 2014.