What are Property Capital Allowances and How Can I Make a Claim?
If a company or an individual buys, improves, or leases a commercial property, then they may be eligible for capital allowances on the said assets. Most operation commercial properties would have assets that are included which can be eligible for claims for capital allowances.
The eligibility for property capital allowances is for assets which are durable and with an expected life or more than two years and these assets are not part of the structure itself but are contained in it or used for it. These are the tools used to conduct the business rather than the structure housing it. A good example would be if you recently bought a property, say a factory, with an existing refrigeration plant; you will only be able to make a claim against the refrigeration system if you or your company will use it but if you don’t need it, then you would not be able to make a claim against it.
Despite this, there are many things that are eligible for the allowance including vehicles, large tools, machinery, furniture, furnishings, computers and telecommunications equipment, electrical goods, safety and security equipment, software with working life of more than 2 years, bathroom equipment, swimming pools, storage equipment etc. There is another category that are also eligible for capital allowances and this includes inefficient cars, power supply systems, water supply systems, lifts, escalators, and people movers.
Except for the inefficient cars, these assets are an integral feature of the property which fall under the second category.
If you have already seen the assets that are eligible for capital allowances, what do you need to do next? When the assets are identifies, then they should be given values and come up with the total value of all eligible assets and you are eligible to claim back an allowance of 20%. So when you claim back 20% of the value this year, you can claim 20% of the remaining allowance on the succeeding years, each year. The writing down allowance for the second category is slightly different because the amount you can claim each year is just 10% of the allowance or remaining allowance in subsequent years. It takes longer to claim the whole allowance for assets in the second category.
So, in summary, capital allowances are an easy yet surprisingly little known way to reclaim your money. IF you have just bought a commercial property and you think that there are assets that can be eligible for claims, then what you can to is to send a qualified surveyor to identify and quantify claims. Then after contacting your accountant, you may reclaim your money from the treasury.
If you are thinking of buying a commercial property, then you can be eligible for property capital allowances.