Capital Allowances are a form of tax relief available to a buyer or owner of commercial property in respect of expenditure on plant and machinery. In April 2014, there was a change to the rules for making a claim for Capital Allowances.
When a commercial property is acquired, the buyer can now claim Capital Allowances in respect of the value of plant and machinery at the property if the seller has pooled the expenditure on those items. This means that the seller must have identified the items of plant and machinery and the expenditure it has incurred on those items.
Specialist advice is required here. If you are buying a commercial property, you should consider whether Capital Allowances might be available and if appropriate seek advice either from an Accountant or a Capital Allowances specialist. It is thought that as much as 20% of the value of a commercial building could be attributable to plant and machinery, in respect of which tax relief in the form of Capital Allowances would be available to a buyer.
If you are the owner of commercial property, you should consider taking steps to identify the plant and machinery which might qualify for Capital Allowances and to ascertain its value. If you are able to pass on the benefit of a claim for Capital Allowances, this will help in negotiating a higher sale price for the property. The increase is generated by the purchaser’s ability to claim the allowances.
The standard commercial property enquiries include detailed questions about expenditure on plant and machinery. This information can be used to substantiate a claim.
The change in the Capital Allowances rules in 2014 has raised public awareness of the availability of this relief. Specialist advice should be sought at an early stage in order to ascertain whether a claim can be made.