Anybody looking to buy or sell a commercial property asset must be aware of new tax laws affecting capital allowances.
These changes have the potential to significantly benefit you if you understand the implications and seek professional advice at the right time, however, there is a danger of losing out on hundreds of thousands of pounds if you are not aware, or do not react within the new timeframe.
What are Capital Allowances?
Capital Allowances are a form of statutory tax relief available on capital expenditure incurred on various fixtures within a building. they enable you, as a UK tax payer, to write off relevant expenditure against taxable profits and income, resulting in a substantial increase in post-tax profit and income.
What has changed?
Previously there was no time limit for claiming capital allowances following the transfer of ownership of a commercial property asset. We simply had to research the ownership / tax history as far back to 24 July 1996 to satisfy HMRC that there had been no prior claim made by any previous owners. However, from 1 April 2014 (6 April 2014 for income tax payers), in order to claim capital allowances, the purchaser may need to ask the seller to 'pool' any qualifying expenditure. In addition, both parties will have to agree the value that will be transferred upon sale, via a s.198 election within a two year time period.
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Please refer to the brochure below which explains the recent changes and answers some of your questions around capital allowances.