FAQs

If you are unfamiliar with Embedded Capital Allowances please browse our most frequently asked questions.

What are Capital Allowances?

The Capital Allowances system allows a business to write off the cost of certain capital assets against taxable income. This is well known and allowances for machinery, plant and business equipment are well known and commonly claimed. The majority of business owners are not aware that there may be allowances “embedded” within the fabric of their building that could give rise to a benefit totalling on average 32% of the value of the property. Capital Allowances provide tax relief for the depreciation of capital assets, including the majority of fixtures and fitting in a property which make it suitable for commercial use. They are intended to incentivize business owners to improve their commercial properties.

How long have they been available?

The basis of modern capital allowance legislation can be traced back to the “wear and tear” allowance on plant and machinery introduced in 1878. A more specific “mills and factories” allowance was available for those types of businesses. This system was replaced in 1945 with a “annual writing down allowance’ at a rate fixed by the Revenue. In 1954, to encourage investment in commercial buildings and industrial assets a further investment allowance was introduced. Further changes to the system were made in 1971 and 1984 to simplify the process or recording and claiming. A widespread rationalisation and consolidation in occurred in 1990 and the currency legislation, the Capital Allowance Act, was introduced in 2001. A Capital Allowance reclaim does not make use of a loophole. It is there to incentivise business owners like you to developer and improve their commercial properties.

What is in it for me?

You may be entitled to a refund on Income Tax or Corporation Tax paid in the last 1 or 2 financial year and reduce your tax burden in the current and subsequent financial years. If you do not claim the money is simply lost over time. More of your profit will go to the government than it needs to in the form of overpaid Income Tax or Corporation Tax.

As an example, a property in the hospitality sector, on average, has capital allowances of 32% of its value built up within it over time. For a £500,000 property that is £160,000 of allowances UNUSED that have built up over time. If you own your property in your own name that could be a £64,000 refund waiting for you.

Who can claim?

If you own a commercial property and pay tax in the UK then you can claim. The kinds of properties which might have allowances built up within in them are:

  • Office Buildings
  • Hotels and Guest Houses
  • Pubs, Restaurants and Bars
  • Care Homes
  • Retail and Industrial units
  • Dentists, Doctors and Vets Surgeries
  • Holiday Lets
What items can I claim for?

The items you can claim for wide ranging and some will surprise you.

You might claim for:

  • Emergency Lighting and Fire Detection Equipment
  • Fittings in toilets, baths and showers.
  • Heating and Ventilation Systems
  • Air Conditioning
  • Kitchen Fittings and Catering Equipment
  • Hot and Cold Water Systems
  • Electrical Systems
  • Lifts
  • Suspended Ceilings and Partitioning

Some items are more specialist such as hoists and bath aids in Nursing Homes or Medical Equipment and systems in a Doctors surgery.

How do I claim?

The first stage is to book an initial consultation which we can do in-person or online. We don’t do the hard sell, we just want to know as much as we can in order to help you as much as we can. We then speak to your accountant to gather some more information and then arrange for a surveyor to visit your commercial property. They gather information about the claimable items in the property and send that to a tax accountant to write a report which is sent to HMRC. Your claim is collected and sent to you less our success fee. The fee is 5.5% of the allowances that we identify for you. The process usually takes between 8 and 12 weeks.

How much does it cost?

We charge a fee of 5.5% of the value of claims that we find for you. You only pay us if you are successful in your claim either by receiving a refund or by getting allowances to offset your future tax bill.

How do I get started?

Just contact us however you feel most comfortable and we will be in touch to get the ball rolling.

I think I'm out of time to make a claim - shall I bother?

It is ALWAYS worth checking with a specialist company whether there are claims that you have missed. We only charge on success so you have nothing to lose and a lot potentially to gain.

I've made a loss for the last few years - is it worth making a claim?

You may not have paid Income Tax or Corporation Tax in the last year or 2 BUT you may be able to reduce your tax burden in the next few years. We only charge on success so you have nothing to lose and a lot to potentially gain.

I don't know how much was spent on improvements to my property - can I still claim?

You do not need to know how much you spent on improving your commercial property. Our expert surveyors are able to allocate costs to each item of expenditure using recognised costing breakdowns.

How does the claims process begin?

The first step is to arrange a free, no obligation consultation online or in-person. We don’t do the hard sell; we just want to know as much as we can in order to help you as much as we can. The purpose of this meeting is to find out about you and your business, explain the process clearly and answer any questions you have. We will also agree the scope of the service, how it is charged for and agree terms.

Do you contact my accountant?

Yes, after the consultation we will contact your accountant obtain your accounts for last 2 years of trading. We will check that no claims have already been made and also ascertain certain “housekeeping” items such as how you pay tax and at what rate.

Won't my accountant already have done this for me?

A successful capital allowance claim requires an effective combination of technical surveying skills and specialist knowledge of taxation statute and case law. The majority of accountants will not be aware of the extent of the items which can be successfully claimed for. There are also widely held misconceptions about capital allowances which the ACCA and ICAEW do little to dispel. If your accountant not does a capital allowance claim for you it does not mean they are bad at their job. It just means that they are concentrating on the nuts and bolts of servicing their clients well such as tax returns, bookkeeping, company accounts and PAYE.

How will my accountant react to me wanting to do this?

They may well be suspicious at first. They may even be a little put out. We are well used to this and are always open and collaborative with clients accountants. We want to work with them to add value to their clients. If an accountant starts off as a sceptic they almost always end up as an advocate. Some of our best introducers are accountants!

How do you work out what I can claim for?

We will send a qualified surveyor to your commercial property to undertake a full and detailed survey of what items are present in the property which might give rise to a claim. Our surveyors are exhaustive in there approach and record everything which may be useful and admissible in increasing your claim. Our expert surveyors are able to allocate costs to each item of expenditure using recognised costing breakdowns. The survey produces a technical report which is presented to our tax accountant.

How do you present the claim to HMRC?

All of our claims are constructed in accordance with HMRC guidelines. Using the survey report our tax accountant will advise your accountant how to amend your tax return.

How long does the process take?

The process usually takes between 8 to 12 weeks from start to finish.

Will HMRC investigate the claim?

A Capital Allowance reclaim does not make use of a loophole. It is there to incentivise business owners like you to developer and improve their commercial properties. HMRC do investigate a small number of claims but that is not something to worry about and it will be dealt with on your behalf.

I have a Holiday Let or Rental - can I claim?

The short answer is yes, but there are lots if specific rules around claiming capital allowances for holiday lets and rentals. These cause owners to be put off making claims so in most cases they will not have claimed for items such as:

  • Heating and Lighting Systems
  • Entry and Exit Systems
  • Emergency Lighting and Fire Detection Equipment
  • Air Conditioning
  • Fittings in Communal Area
I have a Hotel or Guest House - can I claim?

Nursing Homes and Care Homes contain numerous items which will may qualify as claimable under the Capital Allowances Act 2001.

The kind of items which can be claimed for are:

  • Telephone and WIFI Systems
  • Medical Equipment
  • Hoists
  • Bathing Systems
  • Receptions Desks
  • Emergency Call Networks
  • Emergency Lighting and Fire Detection Equipment
  • Fittings in toilets, baths and showers.
  • Heating and Ventilation Systems
  • Air Conditioning
  • Kitchen Fittings and Catering Equipment
  • Hot and Cold Water Systems
  • Electrical Systems
  • Lifts
  • Suspended Ceilings and Partitioning
I have a Pub or Bar - can I claim?

Hotels and Guest Houses contain numerous items which may qualify as claimable under the Capital Allowances Act 2001.

  • Signage
  • Swimming Pools
  • Gym Equipment
  • Spa Equipment
  • Laundry Equipment
  • Reception Desks
  • Bars
  • Emergency Lighting and Fire Detection Equipment
  • Fittings in Toilets
  • Heating and Ventilation Systems
  • Air Conditioning
  • Kitchen Fittings and Catering Equipment
  • Hot and Cold-Water Systems
  • Electrical Systems
  • Lifts
  • Suspended Ceilings and Partitioning

There are also items which create ambience and atmosphere in public spaces such as bars, receptions, reading rooms and libraries which are claimable. These items fulfil a valuable function in creating an environment which customers enjoy spending time in and thus create value and drive revenue.

I have a Café or Restaurant - can I claim?

Cafes and Restaurants contain numerous items which may qualify as claimable under the Capital Allowances Act 2001.

  • Signage
  • Bars
  • Emergency Lighting and Fire Detection Equipment
  • Fittings in Toilets
  • Heating and Ventilation Systems
  • Air Conditioning
  • Kitchen Fittings and Catering Equipment
  • Hot and Cold-Water Systems
  • Electrical Systems
  • Stair Fittings
  • Suspended Ceilings and Partitioning
  • Entry and Exit Systems

There are also items which create ambience and atmosphere in pub Cafes and Restaurants which are claimable. These items fulfil a valuable function in creating an environment which customers enjoy spending time in and thus create value and drive revenue.

Won't making a Capital Allowances will increase my CGT bill when I sell?

It may seem counterintuitive but this is almost never the case. A capital allowance reclaim almost never decreases the buildings base cost for CGT purposes. This is confirmed by s41(1) TCGA 1992.

Rufus & George – Capital Allowances, 4 The Oaks, Clews Road, Redditch, B98 7ST