Case Study

Optimising Capital Allowances for a New Build R&D Facility

Claim results

Years of spend
2021-2023
Claim submitted
2022 & 2023
Construction expenditure
£1.34m
Plant & machinery allowances identified by SRA
£268k
R&D Capital Allowances identified by SRA
£400k
Qualifying cost for structures & building allowance identified by SRA
£613k

About the claim

This R&D Facility near Leeds still had no planning to build when we were approached for review.  

The proactive chartered accountant was involved with these works from the outset and introduced us to maximise the tax benefits for their client.

Capital allowances on R&D facility

Our approach

Firstly, we agreed to build an interim claim in 2022 to assist with the client’s tax planning and submissions to HMRC (on the accountants’ recommendation).

We liaised with the client’s project manager to understand how the expenditure was split between the two different companies: a property company and a trading company.

Then, we surveyed the property to determine and measure those areas of the property were used for R&D purposes and which areas were used in the ordinary day-to-day running of the trading company.

Finally, we needed to account for a small grant payment received by the trading company and disallow a relative proportion of the claim as per the contribution legislation in the Capital Allowances Act 2001.

Example of fixtures that were claimed:

  • Air purification systems
  • Data and telecom installations
  • Door entry systems & access control
  • Ventilation systems

Key Takeaway

Often confused with R&D Tax Credits, R&D Capital Allowances (also called R&D Allowances) are a powerful first year allowance which is often overlooked.

By identifying and claiming for those areas of the property used for R&D purposes, the client was able to claim for structural elements of the building under Research and Development Allowances and so attract a 100% first-year allowance. As a result, they have not paid corporation tax for 3 years.

If they had claimed for these elements under Structures and Buildings Allowances, the tax savings would have been realised at the standard 3% per annum. So, the client had a significant cash flow benefit.

If you have previously claimed R&D Tax Credits, then you may be able to claim R&D Capital Allowances as well on qualifying capital expenditure. Please give us a call for a free consultation today.

Capital Allowances on R&D Facility

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Chris Lonergan

Director

Chris is our commercial lead and is responsible for our relationships with clients, partner firms and other intermediaries. His background spans sales, business development and consulting in several sectors including engineering, construction, professional and financial services.

Chris has been involved with Capital Allowances for over 10 years and has helped hundreds of clients to gain tax relief. During this time he also helped to build a new mid-market accountancy firm out of a larger organisation and spent time with a large specialist tax reliefs business so has good market knowledge and understands how different types of businesses in it operate.

Chris shares Stuart’s philosophy and as part of a specialist business also very much believes in collaboration and joint working with partners to provide the best level of client service and maximised tax benefit.

Philip Rivers

Commercial Manager

Philip joined Stuart Rivers Associates after finishing university and worked hard behind the scenes, learning the ropes of the business.

He now works as a commercial manager involving close liaison with our surveyor team in researching client entitlement as well as helping to develop the business.

Andrew Davies

Director

After working for a major PLC for many years and then working for a local accounting practice, Andrew join Stuart Rivers Associates in 2003.

Andrew has experience in all areas of the business and is currently responsible for the operations team together with the financial management and day to day commercial decisions.

Andrew supports the philosophy of the business and ensures the high quality service that has been built up over the years is not only maintained but developed further to mee the ever changing needs of our clients and joint working partners.

Stuart Rivers

Senior Partner

Stuart is a chartered Quantity Surveyor who formed Stuart Rivers Associates in 1993 after having worked for major national surveying practices where he first encountered Capital Allowances. 

Stuart quickly developed the practice into one of the country’s leading specialist Capital Allowance consultancies providing advice to not only major accountancy practices but also to investors, developers and building owners no matter the size of the business or whether they owned a single building or a large portfolio of property.

 Stuart’s philosophy, which runs through the core of the company, is to provide a service to clients that is accurate, comprehensive, and effortless but above all generates plenty of tax relief.

Consultancy

Whether you are buying or selling we can provide appropriate clauses for the sale and purchase agreement to safeguard potential capital allowances and also advise a potential value of Capital Allowances for negotiation purposes. 

Construction expenditure

We can analyse both current and historic construction expenditure from the available information to ensure you gain the appropriate Capital Allowances from your expenditure. 

For example: 

The refurbishment of an existing building for £1 million could generate between £300,000 and £700,000 of tax relief. 

Property purchases

When acquiring a property either from a developer or a previous owner, we can identify and assess the Capital Allowances you may be entitled to. 

For example: 

A commercial property bought for £1 million could generate between £100,000 and £400,000 of tax relief depending on the type of property. 

It is still possible to claim Capital Allowances on property bought many years ago!

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