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Commercial Property Capital Allowance

Tax Savings Through Commercial Property Capital Allowance Service

Many commercial property owners miss and undervalue Capital Allowance, which is a taxable advantage which can be claimed against spending on Plant and Machinery or property (for the purpose of trade).

The tax advantages from this additional layer embedded within a business property are enormous, and just a few examples include elevators, fire escapes, heating, lighting, wiring, and security systems, to name a few.

If you own commercial property, investing in a Capital Allowance service could help you save money and reduce your property outgoings and is something you are legitimately able to claim. There are a few different Capital Allowance services that can help reduce your tax burden, the main one is working with an accountant who will work with you to determine the most advantageous way to account for your commercial property and any tax claims.

Tax Savings Through Commercial Property Capital Allowance Service

What are capital allowances?

There are a few different types of capital allowance, but in general, they refer to tax deductions that can be claimed on certain business-related expenses. This includes things like equipment, machinery, and vehicles used for business purposes. Capital allowances can also apply to buildings and structures used for business operations. claiming capital allowances can help reduce the amount of tax your business owes each year.

The most common type of capital allowance is the Annual Investment Allowance (AIA). The AIA allows businesses to claim a deduction on up to £1 million of qualifying expenditure each year. This deduction is applied against any profits your business makes in that year, which reduces the amount of tax owed. There are other types of capital allowances as well, such as first-year allowances and writing down allowances. First-year allowances provide an additional deduction in the year that an asset is first put into use for business purposes. Writing down allowances provides deductions for depreciation on an asset over time.

Capital allowances can be a complex topic, but claiming them can save your business a significant amount of money in taxes each year. If you think you may be eligible to claim capital allowances, contact us today on 02920 777 756 or email us and we can help. 

How does capital allowance work?

Capital allowance is a UK government incentive that allows businesses to reinvest profits back into their business. The main purpose of capital allowance is to encourage businesses to reinvest in themselves, which ultimately benefits the economy as a whole.

There are two main types of capital allowances: first-year allowances and annual investment allowances. First-year allowances can be claimed on new plant and machinery purchases, while annual investment allowances can be claimed on all other qualifying expenditures. Capital allowances can also be claimed on research and development expenditure, but only if it meets certain criteria.

The amount of capital allowance that can be claimed depends on the type of expenditure being made and the date on which it was incurred. Generally speaking, the more recent the expenditure, the higher the percentage of relief that can be claimed. For example, first-year Allowances for new plants and machinery are currently 100% relief, whereas annual investment allowance rates are set at 20%.

Does all capital expenditure qualify for the capital allowance?

No, not all capital expenditure qualifies for capital allowance. In order to qualify, the expenditure must be incurred on a qualifying asset. A qualifying asset is defined as an asset that is used for the purposes of carrying on a trade, business or profession.

Capital expenditure can take many forms, such as the purchase of machinery, equipment or vehicles. It can also include the costs of renovating or extending business premises. However, not all of this expenditure will necessarily qualify for capital allowances.

To determine whether an expense qualifies for capital allowances, it is necessary to consider the purpose for which the asset is acquired. If the asset is acquired for personal use then it will not qualify. Similarly, if the asset is acquired for resale then it will also not qualify.

It is important to note that even if an expense does not immediately meet the criteria to be considered a qualifying expenditure, there may still be hope. This is because there are some cases where an expense can be transferred from one category to another. For example, if an item purchased for personal use is later used for business purposes, then it may be possible to claim capital allowances on that item.

Our experienced and qualified accountants at Hayvenhursts can advise you on all of these areas and ensure you are making the most of capital allowance and its benefits. 

How do I claim capital allowances?

Capital allowances can be claimed by businesses through their PAYE scheme. To claim capital allowances, businesses must first generate an annual calculation of their actual costs and then submit this to HMRC.

Can capital allowances be claimed on investment property

Capital allowances can be claimed on an investment property. You need to submit an application form to the HMRC capital allowances office which will review your claim.

Can capital allowances be claimed on any property?

Capital allowances can be claimed on some property, depending on the type of property and the year it was acquired.

Can capital allowances be carried forward?

A company can carry forward capital allowances for use in future years, provided that the cumulative amount of capital allowances carried forward does not exceed the company’s net tangible assets at the end of the year.

Benefits of Claiming Capital Allowances

Claiming capital allowances can be a beneficial way to reduce your taxable income. Capital allowances allow you to deduct the cost of investments in a depreciable asset such as a car or computer from your taxable income. This can reduce your tax liability by reducing the amount of money you have to pay in taxes.

Why Hire A Commercial Property Capital Allowance Service

There are many reasons to hire a commercial property capital allowance service, one being they can help you save money on your taxes. Capital allowance services can help you identify which parts of your property can be considered as plant and machinery, and therefore eligible for tax relief. This can lead to considerable savings over the long term.

Another reason to use a commercial property capital allowance service is that it can help you maximise the value of your property. By identifying which parts of your property are eligible for plant and machinery allowances, you can make sure that you are getting the full value of your property when it comes time to sell or lease it. This can help you get a higher price for your property, or secure a lower interest rate on a loan.

Finally, using a commercial property capital allowance service can give you peace of mind. They will work with you to ensure that all the necessary paperwork is in order and that you are claiming all the allowances that you are entitled to. This can take a lot of stress out of the process of owning and managing commercial properties.

If you need help or advice for your business in regards to Capital Allowance contact us today at 02920 777 756 or email us and we will arrange for one of our Capital Allowance tax experts to give you a call. 

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