This relief works by assessing everything that is attached to the structure of the building, such as lighting, electrics, boilers, air con, lifts, and even down to the door handles. With the data from our surveyors, we are able to work backwards and calculate the value of the three core components of your property. First, the land as a cleared site, second, the bricks and mortar structural cost and the third being the tax-claimable fixtures of the property.
Here's an example of a proportioned Furnished Holiday Let site with a purchase cost of £300,000:
- Land value making up 35% of the purchase consideration - £105,000.
- Bricks and mortar structural cost making up 30% of the purchase consideration - £90,000.
- Capital Allowance eligible fixtures making up 35% of the purchase consideration - £105,000
This is a very simple description of a complex area of tax. With the above example, the fixtures figure of £105,000 is the Capital Allowances figure that would be used to reduce your tax bill. So for a 40% Tax Payer, this would result in £42,000 of actual tax saved.
Now if you were to use the amendment window of your tax return, you can potentially start the claim up to two years in the past. This means you could be due a substantial rebate of over paid taxes. Many have found this a great way to improve net profits and their short term cash flow.
Because of the Tax system in the UK, claiming on depreciating items isn't strictly possible, however Capital Allowances on fixtures is a part of the Treasury's answer to this.
It's a surprising fact that only an estimated 1 in 10 commercial property owners have claimed their full entitlement to Capital Allowances. This unfortunately results in owners effectively tipping HMRC with their hard earned cash.
We have created a Capital Allowances calculator to help owners get an understanding of their available allowances.
If you are unsure whether this is something that you entitled to claim, please fill out the form below and a member of our Capital Allowance team will give you a quick call to discuss this further.