Guide to leasing

Capital Allowances Commercial Property

What are capital allowances on commercial property?

Capital allowances are a Government tax incentive/relief which can be deducted from your corporation, tax bills, or taxable profits on property-related expenditure. As a commercial property tenant, you can claim capital allowances for your purchases on capital items that will benefit your business in the long term.
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What qualifies for capital allowances?

You can claim capital allowances on plant and machinery or items that you use for your business, including heating, lighting, electrics, security, IT, carpets, furniture, racking, shelving, machinery, cranes, trade-related installations, mezzanines, floors, ceilings and walls. You may also claim tax relief from the refurbishment or redevelopment of the premises and the fitting out of the property.

What is the capital allowances rate?

There are three different rate pools for capital allowances and you will need to group the items based on each rate. With the main rate pool, you can claim 18% tax relief on all plants and machinery (e.g. cars, fitted kitchens, bathroom suites, alterations to the building). The special rate pool lets you claim 6% tax relief on solar panels and integral features (e.g. lifts, heating systems, air conditioning, electrical system). The single asset pool are for certain circumstances that don’t fall into either the main pool or class pool, (e.g. short-life assets), and will be 18% or 6% deoending on the item.

You can find out more about the capital allowances rate on the government website.

How do I claim capital allowances?

Generally, you can claim capital gains from particular assets you owned, hired, or leased. Your accountants will claim Capital Allowances on loose machinery. However, it might be more difficult to identify fixtures that are part of the building’s fit-out and ruled by case law. In most cases, you may need a specialist chartered surveyor. Additionally, accountants often miss various ancillary costs which can attract tax relief due to the specialist nature of the legislation.

By leasing with Indurent, you can claim your tax relief through an easy process. If planning fit-out or refurbishment works within your property, contact Veritas Advisory for an initial free desktop estimate of allowances, including potential tax savings. If you are unsure about your capital allowances, get in touch with your Customer Engagement Manager. Alternatively you can contact us via our online form or give us a call at 0800 122 3330.