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Frequently Asked Questions |
What are Capital Allowances?
Capital allowances are designed to allow the cost of your company’s assets, mainly plant and machinery, to be written off against its taxable profits. In effect capital allowances reduce the amount of tax paid by a business. The legislation is contained in the ‘capital allowances act 2001’. In very broad terms a prescribed percentage of the capital expenditure incurred on the asset (mainly plant and machinery) is utilised each year against the taxable profits or income.
Is Capital Allowances a tax loophole?
No capital allowance legislation dates back to 1878. The statutory authority is the Capital Allowances Act 2001. Literally tens of thousands of claims are processed each year by HMRC. The legislation has been put there by government to encourage entrepreneurs to invest in commercial property.
Am I entitled?
The following is the criteria that should be met in order to confirm entitlement:
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The business must be paying UK income tax.
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The business must incur capital expenditure on the asset.
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The asset must be owned by the business and used in carrying out the business.
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The business must include the allowances for the asset in a tax return.
How would I know if my Accountant has claimed all of my capital allowances?
If your property has not had a detailed survey carried out by a chartered surveyor identifying and costing qualifying plant and machinery then there is a strong possibility that the full entitlement of allowances have not been claimed. Whilst many Accountants do provide capital allowance advice many firm of accountants will not have a chartered surveyor’s skill set in order to submit a comprehensive claim. We are confident that we will be able to identify further items of qualifying plant, usually embedded in the fabric of the building and not always apparent to the untrained.
Do capital allowances affect my Capital Gains tax?
Certainly not. Capital allowances are your right and do not have any bearing on your Capital Gains Tax bill.
Should I make a claim?
Capital allowances should be regarded as a ‘right’ and not a ‘privilege.’ They are an entitlement by law and if you have incurred the expenditure you certainly deserve the tax benefit.All of us will claim our state pension as a matter of right. Remember, claiming capital allowances is no less an entitlement.
How do I obtain the tax relief?
Capital allowances need to be actually claimed in order to obtain the relief. A ‘return’ is submitted to the ‘Inspector of Taxes’ by such experts as ourselves. The report details the total expenditure qualifying for capital allowances and it is from this that the relevant percentages and categories of allowances are actually claimed in the accompanying tax return.
We would submit a capital allowances report on your behalf which would include a detailed breakdown of the costs and qualifying assets. Furthermore the report would include calculations and analysis explaining how the capital allowances have been calculated and provide comment on the legislative entitlement to allowances.
Why should I use a specialist firm like Allied McKeon?
There is certainly a case for calling in the experts. As we specialise in this work and use chartered accountants and chartered surveyors we have a very sound and deep knowledge of over 100 years of case history and legislation. We will look further than a superficial listing of plant and machinery and uncover items of capital, embedded deeper in the business. Uncovering this extra layer could add tens of thousands of pounds to a business’s total tax savings. For example not all accountants will claim for the recently introduced ‘integral features.’ These are often hidden in the very fabric of a building and include such items as air conditioning ,space or water heating systems etc.
Remember the list of capital allowable items is vast, much of which is based on..case law. For example pictures in a restaurant may add to the ambience and hence comprise plant; Horses at a riding school would be viewed as plant; optics and glasses in a hotel may be regarded as plant depending on their durability and although a grass football pitch would not be classified as plant, the artificial, soft- impact surface back at the training ground would be deemed claimable as plant for capital allowance purposes. The list is indeed endless and expertise in these issues is imperative in order to maximise the claim.
Are my interests safeguarded?
Allied Mckeon Group Ltd is a firm of Chartered Surveyors whom work in tandem with Chartered Accountants. Both professional bodies obviously have worldwide recognition and both have a strict code of conduct and regulation.
What do you do next?
You contact us for a free, no obligation consultation. |
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