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Important Dates for Capital Allowances

24 July 1996 is one of a number of significant dates for capital allowances.

If you are buying a property, whether old or new, you will need to prove your entitlement to claim allowances. You will also need to prove your entitlement if you are trying to claim allowances on a property which you bought some time ago. 24 July 1996 and some of the other significant dates highlighted below are relevant to your entitlement to claim allowances.

Capital allowances are, of course, a legitimate form of tax relief relevant to most businesses and commercial property investors.

1946

Capital allowances were first introduced in 1946 to encourage investment and to support British industry after the war. That remains their purpose and they are not in any sense a tax loophole. The point has been made repeatedly in Parliament that capital allowances are both legal and in accordance with the spirit of the law.

1996

If you wish to claim plant and machinery allowances on a property purchase you must prove your entitlement to do so. The meaning of plant and machinery is a topic in itself which we will cover in a later article.

As a result of changes introduced from 24 July 1996, you must take full account of claims made by anybody who has owned the property since that date. Proving your entitlement may involve: examining the contract and/or sale and purchase agreement; reviewing replies to enquiries before contract; reviewing any elections affecting former claims for allowances; contacting previous owners and their advisers; making enquiries of HMLR and at Companies House. Some or all of these steps may be required in relation to every owner after this date. This is a statutory requirement and it has been held that the burden of proof lies with the taxpayer to show that full account has been taken of all previous claims. A claim should certainly not be submitted without clear entitlement.

2008

In 2008 new rules were introduced for integral features. Allowances were given for certain classes of expenditure that did not previously qualify, though in some cases the tax relief is now given more slowly. The most important categories of integral features are electrical and lighting systems, hot and cold water systems, air conditioning systems, and lifts and escalators. Where the person selling the property owned it before April 2008, this usually creates an opportunity for the buyer to make a valuable claim for some of these integral features (typically for the cost of cold water systems, lighting and general electrical work).

2012 and 2014

Fundamental changes were introduced in April 2012 and 2014 for capital allowances when buying or selling commercial property. Once more, this is a big topic which we will cover in a later article. It is dangerous to ignore these changes when buying or selling commercial property, however, as there are risks for both the seller and the buyer. If allowances are not properly addressed before exchanging contracts then the chance to claim might be lost forever.

2018     

At Stuart Rivers Associates we are looking forward to 2018 when we celebrate 25 years since Stuart formed the business. We are now a premium firm of capital allowances consultants covering the whole of the UK, Europe and sometimes further afield. We work closely with accountants, tax advisers, solicitors, investors, developers and others to maximise capital allowances tax savings. We hope that this short article introducing some of the significant dates for capital allowances has been of interest and we will be happy to discuss any point with you in more detail.