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HMRC call time on Business Premises Renovation Allowance

Property owners ought to check their recent capital expenditure as they may qualify for the Business Premises Renovation Allowance (BPRA), which is coming to an end on the 31st March for corporate tax payers and 5th April for individuals.

What is the BPRA?

BPRA was introduced in 2007 to give an incentive to bring derelict or unused properties in a disadvantaged area back into use. It allows any expenditure incurred on the property for renovation purposes to be claimable for capital allowances and be received in full in the first year.

For example:

A property is refurbished and the owner/landlord wishes to claim capital allowances on the renovated property.  There is £250,000 qualifying expenditure, and the client is able to claim 100% of this with BPRA which equates to a tax saving of £100,000 for an individual (at 40% tax rate) or £50,000 for an incorporated business (at 20% tax rate).

With such benefits the BPRA proved to be quite popular and was extended to April 2017, five years beyond its original end date back in April 2012.

There are three key criteria to check whether your renovation expenditure qualifies:

1. There must be a qualifying activity

Expenditure on the following activities qualifies for BPRA:

  • Converting a building into business premises
  • Renovating a building that is, or will be, a business premises
  • Repairing business premises

2. The property must in a disadvantaged area

To check if a property is in a disadvantaged area, you can search the postcode of any property through this website - http://www.ukassistedareasmap.com/ieindex.html

3. The property must have been unused for one year

 It must have been unused for at least 12 months immediately prior to commencing the renovation work. It must also have been previously used for commercial purposes; its last use cannot have been as a domestic dwelling.

With accelerated tax relief and disadvantaged areas in popular cities (including Leeds, Bradford, Hull, Sheffield and Manchester to name just a few) it’s easy to see why it’s been such a successful allowance. However, unless there are any extensions for the allowance in the upcoming Spring Budget, the BPRA will end in March/April this year.

If you’re making refurbishments before the end of March, now is the time to check that you may be eligible for BPRA. Even if any expenditure you incur doesn’t qualify for BPRA, you may still receive 100% in the first year through other existing capital allowances such as the annual investment allowance and enhanced capital allowances.

Stuart Rivers Associates works with property owners and developers to help review refurbishment works and identify qualifying expenditure before the March/April deadline. If you have any queries for us, please feel free to contact us.