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Fight Back With Capital Allowances

Wed, 10 Sep 2025 09:02:52 GMT

How overlooked tax reliefs can soften the blow of rising employment costs

It’s not uncommon to see articles like the one below that caught my eye recently. Increasingly, we are hearing from clients and accountants, that the rise in employment costs are starting to bite.

Cornwall's summer job market shrinks

Hospitality job postings are down 22,369 this summer—a 25% drop from 2024, according to the Recruitment and Employment Confederation (REC). Since the 2024 Budget’s NIC changes, the sector has faced £3.4 billion in extra annual costs, resulting in 84,000 job losses. Neil Carberry, chief executive of the REC, has warned “We cannot keep loading new costs onto employers if we want vibrant high streets and strong local economies.” A government spokesperson said the government was “determined to… drive up growth and opportunity in every corner of the country”.

BBC News (Jonathan Morris and Martha Dixon)

Fight back with Capital Allowances

It’s not just the hospitality industry that is grappling with the additional cost of increased corporation tax rates and higher employment costs. An employer currently paying National Insurance on an employee earning £20,000 has seen their NIC bill rise by £745.80.

Making sure that all reliefs and allowances are claimed is now more important than ever. Whilst these reliefs do not help mitigate the increase in National Insurance costs, they do reduce the burden of Corporation and Income Taxes helping fund the additional costs.

Capital Allowances will routinely be claimed for equipment or vehicles used within businesses. However, capital allowances for commercial properties owned by the business can often go unclaimed.

Where a business owns commercial property, whether the property is occupied for use within the trade or leased to a third party, capital allowances may be available. Ensuring that any allowances are identified could be the difference when making future staffing decisions.

There is generally no time limit on claiming capital allowances. Even where a property has been owned for many years, it is possible to go back and claim capital allowances from when the property was acquired or constructed.

Below are two examples of recent claims which highlight the value of allowances on properties purchased many years ago or where a claim is restricted due to prior claims.

Example 1

We recently carried out a claim for a small pub in Bristol that had been purchased in 2008. The property had been cosmetically refurbished since acquisition and this expenditure had been dealt with as repairs.

The property was purchased for £330,000 and allowing for the items that had been replaced, our analysis determined that there was approximately £59,000 of the purchase price that could be attributed to fixtures.

This gave a first-year tax saving of £1,625 which would contribute to the increased Employer NI costs of 2 employees earning £20,000! The allowances would continue to be written down giving savings for many years to come.

Example 2

Another recent claim was for a Care Home in Gloucester which was purchased this year for £1.3m. The claim was restricted due to claims made by the prior owner.

We identified around £141,000 of allowances which gave the company over £35,000 in first year tax savings by using the Annual Investment Allowance. Equating to the increased NI costs for 47 employees earning £20,000 each!

If you have clients that own commercial property, we can give a free appraisal of the capital allowance position and fees only become payable when allowances are identified and our report is issued.

There's still time to make a claim for FHL owners

Thu, 08 Aug 2024 12:35:10 GMT

It was announced during the budget speech back on 6 ^th March 2024 that the Furnished Holiday Let (FHL) regime would be abolished with effect from April 2025.

At the time, no rules were announced as to how the transition for businesses would work.

After a long wait, The Chancellor, Rachel Reeves has now announced the draft measures to be introduced for the abolition of Furnished Holiday Lettings Relief.

In summary, Furnished Holiday Lettings benefit from several beneficial tax treatments compared to other property businesses:

No restriction of finance costs (Residential landlords are restricted to loan interest at the basic rate of Income Tax).
Capital Allowances are available on qualifying expenditure.
Access to reliefs from taxes on chargeable gains for trading business assets.
Earnings from FHL’s are relevant income for pension purposes.

For the qualification rules for FHL’s, please see our previous blo g . For the remainder of this article, we will focus on the changes to capital allowances only.

After repeal, former FHL’s will form part of the person’s UK or overseas property business and be subject to the same rules as non-FHL property businesses.

For new expenditure, on or after 1 ^st April 2025 for Corporation Tax and 6 ^th April 2025 for Income Tax, no capital allowances will apply. However, there is some good news for existing Holiday Let owners.

The Good News

Where an existing FHL business has an ongoing capital allowance pool of expenditure, they can continue to claim writing down allowances on that pool. However, any new expenditure after April 2025 will not benefit from capital allowances.
Under current rules, a loss generated from an FHL property business can only be carried forward and utilised against future profits of that same FHL business. After the changes, former FHL properties will be part of the persons UK or overseas property business. That property business will then include the amalgamated profits and losses of all the properties in that business.

Key Points

FHL’s will form part of a person’s UK or overseas property business from April 2025.
Capital allowance pools as of April 2025 can continue to be written down.
Losses on FHL businesses will form part of the normal UK or overseas property business.

A client example

Our client owns a FHL in Devon and has met the qualifying criteria. The property was purchased in the 2021/22 tax year for £500,000. Whilst trading was good in the first few years, other expenses, such as soft furnishings, meant that very little profit was made in 2022 and 2023.

A capital allowance exercise was carried out on the property and £123,000 of allowances were identified. These allowances were fully utilised in the year of purchase by allocating them to the Annual Investment Allowance and creating a significant loss to carry forward.

Under the current rules, this loss could only be used against future profits from the FHL business.

After 6 ^th April 2025, this loss will be able to be offset against profits from the client’s other property income.

More example claims can be found on our Furnished Holiday Lettings blog . For more information, please contact one of the team.

Super Deduction

Mon, 20 Nov 2023 13:22:36 GMT

Don’t miss out on extra relief

In April 2023, Super Deduction was replaced with Full Expensing.

On the face of it, this was great news for companies purchasing qualifying assets. However, as per a statement by the Association of Tax Technicians, Full Expensing will be of little benefit to the vast majority of businesses in the UK.

Senga Prior, chair of ATT’s Technical Steering Group, said:

‘’The introduction of Full Expensing will help the UK’s largest companies with investment in plant and machinery of over £1m to obtain immediate relief from tax and will therefore go some way towards compensating for the loss of the Super Deduction.

However, it will do nothing to assist the 99% of companies whose qualifying expenditure on plant and machinery is below that level and for whom the AIA already provides full relief’’

To recap, Super Deduction was introduced in April 2021. Super Deduction gave 130% relief on qualifying costs on Plant & Machinery and was introduced to avoid companies delaying expenditure until April 2023, when the main rate of Corporation Tax increased to 25%. A 130% deduction, at 19% Corporation Tax gives 24.7% relief.

For companies with profits over £250,000, Super Deduction brought tax relief broadly in line with the new published main rate of Corporation Tax of 25%. However, for companies with profit below this level, Super Deduction gives a significant real advantage.

With Super Deduction, those companies with profits below the small profit rate of 19% (below £50,000), qualifying expenditure up to 31.3.23 will have effectively yielded an additional 5.7% of relief. For those with profits between £50,000 and £250,000, marginal relief will apply for periods starting from 1.4.23 and so the additional relief effectively given by Super Deduction before that date will vary.

Many clients will have spent money on qualifying equipment during the period of Super Deduction. For assets such as vehicles, machinery and computer equipment, Super Deduction would have been routinely applied in the accounts. However, where the qualifying items are less obvious and more difficult to identify, such as in the construction or refurbishment of a commercial property, allowances may have been missed.

We have worked on many projects where Super Deduction has been relevant and has provided significant benefits to our clients.

With the removal of Super Deduction in March 2023, it makes sense to review all corporate clients to ensure that any qualifying expenditure for the period 1 ^st April 2021 to 31 ^st March 2023 has been allocated correctly. Similarly, to the availability of Annual Investment Allowance (AIA), if the claim is not made in the year of expenditure, the availability of Super Deduction will be lost and more restrictive Writing Down Allowances will apply on 100% of the expenditure, rather than the enhanced rate of 130%.

If you would like to speak further about this, or believe that you might have clients that would benefit from a review of their expenditure please contact one of the team .

Key Points

Super Deduction has a real benefit of an additional tax saving of up to 5.7% for smaller companies.
Time is running out to amend returns for the Accounting Period where Super Deduction can apply.
Full Expensing, whilst advantageous for large corporations, spending more than £1m on qualifying assets, it will be of little relevance to most smaller companies as the Annual Investment Allowance will cover most of their expenditure.
Care must be taken where a company’s financial period ends after 31 ^st March 2023 where hybrid rates of Corporation Tax and Super Deduction may apply.

The value of a survey

winvalinvest@gmail.com (Steve Brown) — Tue, 07 Jun 2022 08:39:12 GMT

The value of a survey

A lot like buses, things in business tend to occur more than once in a short space of time. We have recently been reminded about the importance of a survey and why it plays a vital role in how we add value for accountants and their clients.

‘My property is just a basic shell’

Recently, we discussed a case with a partner from a regional office of a national accountancy firm. It highlighted to us the importance of offering a full service and which is why we survey every property that we evaluate. (Note: We do have procedures where we can remotely survey a property. However, this is only used where a full site visit is impossible).

The firm in question has an in-house capability for capital allowances work, especially where cost information for new build and refurbishment work is known and broken down. However, they like many, appreciate that they may need assistance where costs are unknown or more importantly, where a property changes hands and an apportionment exercise is required.

The case involved a client who had recently sold a unit, which they had acquired new from a developer, a few years ago as a ‘warehouse shell’. When the client was taken on by the adviser, they were asked about whether there was scope for allowances and were insistent that it was ‘just some walls and a roof’.

The client installed a lot of air conditioning, lighting etc. which the accountant claimed for. This was protected on sale by a s.198 election.

The purchaser employed capital allowance expert who identified items which had not been claimed for by the seller, that were part of fabric of the original ‘shell’ – a lift, toilets, wiring etc.

One thing that we can say for certain is that is very rare for a building to be ‘just a shell’. We have visited properties in the past where claims are difficult to justify on the basis that they are a basic unit with a roller shutter door, a waste stack in the corner with the mains electrical box at the entrance. However, these are unusual. More often, there are electrical systems, lighting (or wiring for lighting), plumbing etc. There can be a lot of value in these ‘hidden’ assets.

Had a survey taken place for the client above, it would have become apparent that the building was more than just a shell and given that it included a lift, it is not unreasonable to think that the claim for the acquisition alone could have amounted to 15% of the purchase price or more.

Construction costs are often not clear

In another recent case the value of a survey was again in evidence.

We were asked by an accountant client to review some expenditure in a clients fixed asset register which consisted largely of ground works. Much of the obvious plant and machinery had already been attributed to Plant and Equipment by the company’s accountant.

Upon survey, we observed a large wash down bay for industrial vehicles, the client is a plant hire company. Further inspection and analysis of the fixed assets confirmed that there was no mention of the wash down bay.

The upshot was that the wash down bay accounted for £45,000 of the ‘ground works’ which would have gone unclaimed had a survey not taken place.

For further information or to discuss an ongoing or historic project, please contact one of the team .

Furnished Holiday Lets

winvalinvest@gmail.com (Steve Brown) — Mon, 17 Jan 2022 11:57:28 GMT

Valuable Tax Relief for Holiday Rentals

With international travel restrictions in the UK being more onerous for holiday makers, more and more are choosing to holiday at home in the UK.

This has been a boon to the Furnished Holiday Let (FHL) market where more property owners are finding that letting their second home is creating a sizeable profit.

Historically, whilst Capital Allowances have been available on FHL’s, for many, the profit levels have not justified claiming the Capital Allowances as they can only be used against the profit of the holiday let business and not used sideways against other income like most other Capital Allowances. However, since the start of the pandemic, with nightly rates and occupancy levels on the increase, claiming Capital Allowances has become ever more important.

To qualify as a Furnished Holiday Let for Capital Allowances purposes, certain criteria must be met: -

· The property must be available for letting for a minimum of 210 days per year

· The property must be let of 105 days per year

· Periods of 31 days or more are not counted

· The property must be situated in the UK or European Economic Area

The rules are in place so that only genuine FHL’s receive the benefit of Capital Allowances and not just second homes that are let on an ad-hoc basis. The rules allow for the above qualification criteria to be averaged over multiple FHL’s under the same ownership.

Over the last few months, we have seen a stepped increase in the number of holiday lets that we have been asked to survey. Here are just a few of the properties where we have identified valuable tax relief:

It is not uncommon to find between 20-35% of qualifying costs available as tax relief for Furnished Holiday Let owners.

This means that owners can pay little or no tax on many years of rental profits.

To find out more, please contact one of the team.

Budget 2021 - Capital Allowances

Fri, 12 Mar 2021 14:42:50 GMT

Budget 2021 - Capital Allowance Summary

Last week’s budget was one aimed at investment, private investment that is. According to Government figures, the already low levels of business investment has fallen further by some 11.6% since the start of the Covid-19 pandemic. Consequently, it was an interesting budget for Capital Allowances.

Budget 2021 - Capital Allowance Summary

Several new measures were announced during the Budget by Rishi Sunak. Mr Sunak announced that businesses will now benefit from four significant capital allowance measures: -

New - The Super Deduction - which offers 130% first-year relief on qualifying main rate plant and machinery investments until 31st March 2023 for companies.
New - 50% First Year Allowance (FYA) for special rate (including long life) assets until 31st March 2023 for companies.
Confirmation that the Annual Investment Allowance (AIA), providing 100% relief for plant and machinery investments up to its highest ever £1 million threshold, will be extended until 31st December 2021. Please see here for more information.
Introduction of Freeport Tax Sites , companies will be able to access new Enhanced Capital Allowances (ECA+) with companies, individuals and partnerships benefiting from an increased level of Structures & Buildings Allowance (SBA+) for investments until 30th September 2026

We will cover each of the above in future bulletins since there are still questions to be answered. However, unsurprisingly on first read, it seems as though these new measures may not all be as generous as they first appear. In the meantime, if you wish to discuss them please do get in touch.

In addition to the measures that were specific to Capital Allowances, there were a couple of interesting measures that will no doubt make capital allowances more important in the near and long term: -

Temporary extension to carry back of trading losses for both Corporation and Income Tax.

There are many businesses, across the UK, who were successfully trading and profitable pre-COVID 19 and now have their balance sheets under severe trading pressures due to the effects of the Coronavirus outbreak.

Some businesses have experienced reduced demand for their products and services, or disruption to their supply chains as a result of the outbreak and associated restrictions. This has led to increased trading losses in the short term for many businesses.

Mr Sunak announced that, the usual time limit for carrying back of a trading loss of one year, will be extended for a further 2 years.

Where companies or individuals have capital allowances that may have gone unclaimed in the past on properties that they own, trading losses can be increased. By claiming these capital allowances now, businesses will be able to benefit from additional relief for trading losses, thereby potentially generating repayments for tax paid over the three previous years.
Corporation Tax is on the rise

In a widely expected move, the headline rate of Corporation Tax was increased to 25% for companies with £250,000 profit and above. The rise, which takes effect from 1st April 2023 is more than a 30% increase for some companies. Smaller companies, those with profits of less than £50,000, will be unaffected by the increase. For companies with profits between £50,000 and £250,000, a taper will be introduced.

Clearly, any increase in rates of taxation is a shot in the arm for capital allowances. This is a far cry from the anticipated reduction in corporation tax to 17% which was announced in the 2016 Budget. It will now be even more important to make sure that capital allowances are maximised and any historic claims that have been overlooked, are brought into account to reduce the increased tax burden going forward.

To discuss any of the items covered by the Budget please contact one of the team .

When Capital Allowances go wrong!

winvalinvest@gmail.com (Steve Brown) — Thu, 11 Feb 2021 12:07:02 GMT

How HMRC intended the FA2012 rules to really work

We are increasingly encountering cases where the rules introduced in the Finance Act 2012 are having a greater adverse impact.

We are now over 6 years past the date when the new rules for transferring allowances between seller and buyers came fully into force so let’s have a brief recap.

In most cases, for properties purchased prior to 2014, for a buyer to claim capital allowances on the fixtures to a property, they must establish whether a prior claim had been made by the previous owner and any previous owner since 1997. This was usually carried out by the client’s advisers who would trace back through the property history and available documentation. In most cases, due to poor historical advice, a claim for the new owner was likely and still is for properties purchased prior to April 2014.

However, since 2014 where the seller had an entitlement to claim allowances, the requirements of FA2012 must be satisfied in order that the buyer may be able to claim them. This means that the vendor must Pool the expenditure into their tax computations (the Pooling requirement) and then pass the allowances to the buyer by way of an election (the fixed value requirement). The rules apply whether the seller had made a claim or not, even if they were unaware of the potential for allowances themselves.

Where the requirements of FA2012 are not satisfactorily dealt with during a property purchase, allowances can now be lost forever, which is unfortunately often the case.

Example

We have recently analysed a portfolio that included 7 properties, which were purchased for a total of more than £7.5m. Each of the properties had changed hands since 2014 and had been purchased from a seller who was entitled to claim capital allowances. Therefore, the FA2012 rules applied in all cases.

Whilst it appeared on initial analysis that there had been very little in terms of prior claims by previous owners, our client was out of time to go back to satisfy the requirements of FA2012 and get the allowances passed to them by the various sellers.
All but one of the properties had been purchased by the previous owner after April 2008 when the Integral Features legislation was introduced and so even a top up claim was not possible. For the property where a top up claim was made, approximately £60,000 of allowances were identified. For examples of top up Integral features claim, see the ‘Restricted Claims’ section in our Gallery on our website.
Had this client taken capital allowance advice upon the purchase of each property, it is not unreasonable to estimate that allowances would have been somewhere in the order of £1 million or more.

Whilst this is possibly the most extreme case of lost allowances that we have come across, we have seen a number of cases similar to the one above and believe that unless more clients are offered capital allowance advise when either buying or selling a property, more allowances will be lost forever….exactly as HMRC intended when they introduced the rules in 2012.

We can help you and your clients maximise their entitlement to claim allowances, whether they are buying or selling a commercial property. Even clients who have owned commercial property for some time should ensure that allowances have been fully identified.

For more information please do get in touch with one of the team.

January Deadline Extended!

winvalinvest@gmail.com (Steve Brown) — Wed, 27 Jan 2021 17:21:34 GMT

January Deadline Extended!

In a late move, that will no doubt bring joy to many accountants and tax advisers, HMRC have announced that the deadline for submitting self-assessment tax returns has been extended from 31st January 2021 to 28th February 2021. This extension is expected to help more than 3 million people, that are yet to have submitted their returns, avoid receiving a penalty for late filing.

We have managed to get ourselves ahead of the game at Elemental Tax and our last January case was issued today, Wednesday 27th. However, with the new deadline of the 28th February, any individuals with personally owned property can still submit their tax return until the end of February and reduce the tax payable to HMRC.

Even those who have already submitted their return can still amend their tax returns in the normal way through to 31st January 2022 and receive a refund of tax that has just been settled.

The government said it was still encouraging people to file by 31 January if possible, adding that taxpayers were still obliged to pay any tax that they owe for the year by 31 January and that interest would be applied to any outstanding balance from 1 February.

However, if capital allowances are available, tax liabilities can be reduced, sometimes to zero giving the ability to avoid any interest payments altogether.

Over the last few months, Elemental Tax have uncovered more than, £3.5 m in capital allowances which resulted in more than £1m in tax savings for our clients.

Over that period, we have analysed properties and portfolio held by companies, partnerships and individuals ranging in costs from as low as £25,000 to more than £4m.

It is rarely too late to go back to assess a property acquisition, construction or refurbishment to see if capital allowances are available.

January and now February is the ideal time to consider capital allowance claims for clients who own commercial property in their own name or via a partnership.

Key takeaway’s

• Capital Allowances are a valuable form of tax relief.

• The higher the marginal tax rate paid the bigger the benefit.

• Allowances are of greater benefit to individual owners who pay tax at rates of 40% or even 45% (41% and 45% in Scotland).

• It is also possible to regain personal allowance lost if income is reduced below £125,000, resulting in an effective tax saving of up to 60% in some cases.

• It is rarely too late to go back and analyse historic costs.

• Contact Elemental Tax if you or your client’s own commercial property and are yet to make a claim.

£1 million Annual Investment Allowance extended

winvalinvest@gmail.com (Steve Brown) — Thu, 12 Nov 2020 10:38:22 GMT

£1 million Annual Investment Allowance extended

On the 12th of November the Government announce an extension to the temporary increase in the Annual Investment Allowance (AIA) through to 1st January 2022.

The AIA was originally increased from £200,000 to £1 million for the period between 1st January 2019 and 31st December 2020 and was due to revert to £200,000 on 1st January 2021. However, to further stimulate the economy through the ongoing pandemic, the £1 million limit has been extended to 1st January 2022.

The AIA is a valuable benefit which accelerates the use of capital allowances. This could range from buying a piece of equipment for your trade to the allowances available on fixtures to a commercial property that was built, bought, extended or refurbished in the current year.

This is a welcome extension and recognises the need to stimulate the economy through this uncertain period and generating valuable tax relief when it is most needed.

For more information on ‘Making the most of the Annual Investment Allowance’, please see our previous blog.

Financial Secretary to the Treasury Jesse Norman said:

‘’It is vital that we support business through the difficult months ahead.’’

‘’Extending the Annual Investment Allowance’s £1 million cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.’’

As part of today’s announcements, the government is also delivering on its commitment to help protect UK taxpayers through clamping down on promoters of tax avoidance schemes.

This emphasises the importance of legitimate tax planning such as capital allowances and maximising relief wherever possible.

We can help your COVID recovery

Tue, 05 May 2020 17:34:36 GMT

These are certainly unprecedented times. The country has been in lockdown since 23rd March and the UK Government has responded to the Coronovirus pandemic with unrivalled support for business. Once businesses have secured the grants and funding to help stabilise their immediate future what's next?

What's next?

Once lending has been secured and the grant funding on offer has been obtained many companies are looking at other ways to save money and reduce costs.

Often overlooked, saving tax can be an extremely efficient way to improve future cash flow and in many cases, generate a refund of tax already paid. Tax reliefs such as Capital Allowances and R&D Tax Credits should be maximised wherever possible.

How can Capital Allowances aid your COVID recovery?

Whether you own or rent your property, whether you built it yourself or purchased it many years ago, there may be unclaimed capital allowances embedded in the fabric of your property.

Those allowances can be used to reduce current and future tax bills, and even generate a tax refund by starting the claim in a prior tax year that remains open (tax years are generally open for 12 months following the submission of the return).

In addition, utilising the Annual Investment Allowance (AIA), allowances can often be used immediately to generate significant tax savings.

Recent Case Study - £22,000 tax refund!

Retail Unit in Wiltshire - Purchased in 2017

Elemental Tax were introduced to a corporate client 3 weeks before the end of their current financial period. The survey was booked in for the 24th March 2020, a day after lockdown!

The claim was restricted due to the time limit for transferring allowances from buyer to seller had expired, even though the seller had appeared to have made no claims. However, the buyer was entitled to claim the new integral features that were introduced in the Finance Act 2012.

Elemental Tax carried out a virtual survey of the property, using previously developed systems and processes to complete the clients claim in time for the company's year end.

The client benefited from over £120,000 in capital allowances (tax relief). By amending their 2017/18 return and utilising the AIA the client was able to obtain a refund of tax in excess of £22,000.

Making the most of the Annual Investment Allowance

Sat, 01 Feb 2020 18:34:36 GMT

Capital allowances are a form of tax relief that are designed to encourage investment in assets which lead to economic growth. Usually the allowances are given over the perceived life cycle of the asset in the form of writing down allowances (WDA's). The Annual Investment Allowance (AIA) accelerates the way in which allowances can be used and in many cases allows the entire cost of the asset to be offset in the year of purchase.

The AIA was introduced in 2008 and has seen many alterations to the levels of expenditure covered by the allowance. The level is often increased or decreased by the government in order to stimulate economic activity.

The Annual Investment Allowance is available to sole traders, partnerships (provided partners are individuals) and companies.

In July 2015, the Government announced that the level going forward would be set permanently at £200,000 for qualifying expenditure on or after 1st January 2016.

A temporary increase

From the 1st January 2019 the AIA was temporary uplifted to £1,000,000 and will fall back to £200,000 on the 31st December 2021.

According to HMRC's website, the policy measure is designed to stimulate business investment in the economy by providing an increased incentive for businesses to invest in plant or machinery.

This temporary increase will also help offset the effects of the withdrawal of Enhanced Capital Allowances, which will no longer be available from April 2020, and the reduction in WDA's on Special Rate Pool expenditure (Integral Features) from 8% p.a. to 6% p.a. which took effect from April 2019.

Interaction with commercial property

When you purchase, build or refurbish a commercial property there will always be an element of the property that will qualify as plant and machinery. This could be large value assets such as a heating or air conditioning system and even smaller items such as door handles.

By utilising the Annual Investment Allowance, any tax relief on assets that can be identified as plant and machinery or fixtures can be accelerated up to the current AIA maximum.

Therefore, assuming an apportionment of 20% of a properties purchase or construction price to fixtures, costs as high as £5m could see all of the allowances available to be offset against profit or income in the year of expenditure.

Example of a recent claim

A corporate client acquired a mixed use property from a developer for £1m plus costs. We identified £133,267 of allowances which comprised £68,024 of Integral Features (IF) and £65,243 of General Pool Plant and Machinery (P&M).

Utilising the AIA, as a corporate client our client was able to generate a first year tax saving of £26,653. Had the AIA not been used, the first year tax saving would have been £3,265.

AIA - an important relief

Making sure that the annual investment is maximised for qualifying expenditure is an important piece of planning. This is especially true when dealing with Integral Features where the writing down allowance is now set at 6% p.a. on a reducing balance.

Utilising the AIA in conjunction with expenditure on commercial property can save tens if not hundreds of thousands of pounds in the qualifying financial period.