Capital Allowances

Capital allowances are a relief from corporation or income tax and are based on the capital expenditure incurred on the provision and installation of certain Plant and Machinery assets within a building.

Every building contains an element of Plant and Machinery, which will qualify for capital allowances, such as heating and air conditioning, electrical installations, hot and cold water systems, sanitary ware, lifts, fire alarm systems and fire fighting equipment to name just a few. However, other less obvious assets will also qualify, for example carpet, security equipment, furniture and fittings.

To qualify for capital allowances, the property owner or occupier must be a taxpayer and must:-

• Incur capital expenditure on qualifying Plant and Machinery.
• Use the qualifying Plant and Machinery in the course of its trade, either as an investor or as an occupier of a building.
• Demonstrate that it owns the qualifying Plant and Machinery.

By claiming capital allowances you are easing your tax burden, thereby improving the net return of a property and increasing cash flow. Capital allowances planning should therefore form a vital part of ensuring the viability of any property transaction.