When buying a commercial property it is often possible to claim significant tax relief on the plant and fixtures within the building using capital allowances.
The rules on such claims change significantly on 1 April 2014 and action in advance of property purchase will be needed in order to retain any possibility of making claims.
The changes are important and should be noted by all parties involved in commercial property transactions.
The relevant legislation for the above was introduced as part of the Finance Act 2012 and we have been in a 2 year transitional period which ends on 31 March 2014.
In broad terms, capital allowances will not be claimable by a buyer acquiring a second hand property after 31 March 2014 where the allowances have not been pooled by a seller and included in a Fixed
Value Requirement (s198 Election) or a Disposal Value Statement. Advice should therefore be taken before the purchase takes place.
Failing to take account of the changes means property owners may lose out on considerable tax relief or may even suffer a reduction in property value for onward sale.
As regards historic acquisitions, despite what some press releases would suggest, there are no additional restrictions on retrospective claims and these can be made at any point prior to disposal. It is therefore well worth checking that the maximum tax relief has been claimed on previous commercial property purchases. Clearly the sooner these claims are made, the sooner the cash flow benefit is obtained. Our capital allowances specialist can provide a no obligation review of potential claims – contact us for details.