Capital Allowances

Dale Potts
Will your organisation correctly identify and claim the correct capital allowances tax relief for the year ahead?

What are Capital Allowances?

Capital Allowances are a form of tax relief designed to allow the cost of some of a company or organisation's assets to be written off against its taxable profits.

How does it work?

Capital Allowances reduce the amount of tax paid, by allowing capital expenditure incurred on certain assets to reduce profits or taxable income.

The categories of capital allowances available primarily depend upon the qualifying asset in question and the trade carried out by the business incurring the expenditure.

Generally a prescribed percentage of capital expenditure incurred on any qualifying asset can be utilised each year against taxable profits or income.

Capital Allowance legislation is contained in the Capital Allowance Act 2001 and allowances can be claimed where an organisation incurs capital expenditure in one or more of these situations.

  • Purchasing an existing property
  • Selling a property
  • New building construction
  • Refurbishment
  • Fit-out works

Which items of capital expenditure may qualify?

  • Plant and machinery
  • Business Premises Renovation Allowances
  • Flat Conversion Allowances ( for flats above shops)
  • Research and Development Allowances
  • Mineral Extraction Allowances
  • Dredging Allowances
  • Know-how Allowances
  • Patent Allowances
  • Land Remediation Relief

Faithful+Gould can help

Capital allowances must be actively claimed in order to obtain the tax relief. They can only be claimed on a tax return for the chargeable period, or by inclusion in an amended tax return.

Each year property owners and investors lose significant sums as a result of under-claimed capital allowances. Faithful+Gould has a detailed understanding of complex construction costs and capital allowance legislation. We can therefore provide clients with specialist expertise, ensuring everything that can be claimed is accurately identified and calculated.



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