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Care Homes – Allowances of £700,000

This property was acquired by a care home group and the purchase contract identified that the seller had previously claimed Capital Allowances on part of their expenditure but had not elected to retain any allowances. The purchase was made before the introduction of integral features. 

Typical claimable items include: Heating installation, emergency lighting, hot water installation, passenger lift, cold water installation and nurse call system.

 The  purchase price of the care home was £2.7 million and Stuart Rivers Associates apportioned the purchase price to generate £800,000 of additional Capital Allowances for the purchaser taking into account the restrictions from the allowances previously claimed by the former owner.

Today this would produce an overall tax saving for a 20% taxpayer of £162,000 for the investor with a first year saving of £20,000 excluding the impact of the Annual Investment Allowances (AIA). If the owner was able to benefit from the full value of the AIA (£200k) then the first year tax saving would increase to £55,000.