For commercial property owners, developers, and investors, Capital Allowances offer a valuable opportunity to reduce tax liabilities and improve cash flow. Yet many businesses overlook or underclaim these reliefs, missing out on significant financial benefits.
With the Autumn Budget 2024 reaffirming the government’s commitment to supporting business investment – particularly through the permanent adoption of full expensing and enhanced reliefs – now is an ideal time to revisit Capital Allowances as part of your tax strategy.
Chris George, Tax Partner takes a look at how tailored advice and expert support can help you unlock the full value of your capital expenditure.
What Are Capital Allowances?
Capital Allowances are a form of tax relief that allow businesses to deduct the cost of qualifying assets from their taxable profits.
For property owners, this typically applies to fixtures and fittings and integral features within commercial buildings—such as heating systems, electrical installations, lifts, and sanitary fittings—as well as plant and machinery used in the business.
Capital Allowances are generally not available to owners of residential property except in some very specific circumstances.
Autumn Budget 2024: Stability and Opportunity
Unlike many other taxes, the Autumn Budget in October 2024 delivered a message of stability, for the capital allowances regime with no major changes.
Crucially, the Government confirmed:
- Permanent full expensing: Businesses can continue to deduct 100% of the cost of qualifying, new plant and machinery in the year of purchase.
- 50% first-year allowance: For special rate assets such as integral features.
- Annual Investment Allowance (AIA): Maintained at £1 million per year, offering 100% relief for qualifying expenditure.
- Structures and Buildings Allowance (SBA): Unchanged, allowing relief on construction and renovation of commercial buildings.
These measures were confirmed to stay in place for the remainder of this parliament and hopefully provide certainty for long-term planning.
Who can benefit?
Capital allowances are relevant to a wide range of property-related businesses:
- Landlords: Investing in refurbishments or fit outs of commercial properties.
- Developers: Constructing new buildings or undertaking large-scale renovations.
- Owner-occupiers: Businesses purchasing or improving premises for their own use.
So, whether you’re acquiring property, upgrading facilities, or investing in infrastructure, Capital Allowances can significantly reduce your tax bill.
Types of qualifying assets
Capital Allowances can be claimed on:
- Plant and machinery: Office equipment, vehicles (excluding cars), and tools.
- Integral features: Electrical systems, heating and cooling systems, water systems.
- Fixtures: Items fixed to the building such as lifts, sanitary ware, and kitchen fittings.
- Structures and buildings: Relief on construction and renovation costs.
Identifying these assets often requires a detailed review or a specialist survey, especially for embedded fixtures in property acquisitions.
Common oversights
Despite the advantages, many businesses miss out on maximising their allowances. This can be due to many factors, but particularly in misunderstanding what assets do and don’t qualify for relief, delaying making a claim, potentially reducing the value of the relief and not seeking specialist input to ensure the claim is maximised while remaining robust.
Why act now?
While Capital Allowances were left alone in the 2024 Budget – with a clear hole in government finances, the promise to keep allowances at current levels for the remainder of this parliament could fall by the wayside.
Making a claim now can help you make sure that relief is maximised at the current rates.
We’re here to help
As specialists in Capital Allowances and property tax, we offer:
- Capital allowances surveys
- Claim preparation and submission
- Strategic tax planning
- And support with HMRC compliance
So, whether you’re a landlord, developer, or property-owning business, we can help you unlock the full value of your investment and avoid the pitfalls through proactive planning and expert guidance.
Get in contact with Chris or one of the tax team today by emailing
hello@scruttonbland.co.uk or calling 0330 058 6559
