The value of a survey

The benefits of claiming capital allowances for Furnished Holiday Let's

A summary of the 2021 Budget - Capital Allowances

How capital allowances can be lost when buying or selling commercial property

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.

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.

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?