Through capital allowances, you may be able to reduce the after-tax cost of your company’s capital expenditure.
To write-off the cost of certain capital assets against taxable income, you can make a claim for capital allowances.
Capital allowances are generally the only form of tax relief against capital expenditure (including some of the costs of acquisition of commercial property). Capital allowances compensate for depreciation not normally being deductible for tax purposes.
It is common however for businesses to underestimate the proportion of their capital expenditure that qualifies for capital allowances. This means you may be paying too much tax.
There are many situations that give rise to eligible capital expenditure. Generally speaking, a business’ expenditure on plant and machinery will qualify for capital allowances. This tends to be well-known by accountants and business owners.
However, expenditure on property-related items can also lead to valuable claims for capital allowances. For example, construction projects, extensions, alterations or refurbishments of existing buildings, purchases of newly constructed buildings from a developer, or ‘second hand’ buildings and leasehold improvements may also result in a claim.
For owners of commercial property that pay tax in the UK, a thorough review of all capital expenditure can yield surprising results in minimising your tax liability.
Here to help
As experienced tax consultants, ETC can help you maximise the tax relief available to your business through a capital allowance claim.
Whether you are operating a business or letting a property, we can advise on the full extent of your eligibility and qualifying expenditure to maximise the amount you can claim, help improve your cash flow and reduce your tax liability.
We will undertake a review of your purchases and assets by reference to periods of account. We will identify and categorise all qualifying expenditure, including missed opportunities, and produce the supporting documentation and claim submission to HMRC on your behalf.
In addition, as specialists in tax advisory services, we can provide as part of the review process advice on the many other tax reliefs that may be available to your business, for example, if you have overseas property.
We are also experienced in working alongside other professional advisers as part of live project teams. Factoring allowances early in a project as part of negotiations can have wider implications. We can provide tax advisory support and guidance from the outset of a project to maximise tax efficiency and financial benefit across all areas of activity.
Our service also covers options for tax relief on hired assets. Typically you should not expect to be eligible to claim capital allowance on assets you are leasing or hiring. In such cases, we will assess if you are able to obtain alternative relief on the hire costs, for example as revenue expenditure.