Embedded Capital Allowances
Maximising your annual tax allowances on capital expenditure
Have you spent over £250,000 on building and property in the last 12 months?
If so, it is important that you contact a specialist tax adviser like Folkes Worton to ensure that you are tax efficient. We can make sure that you have maximised your annual tax allowances by claiming capital allowances on allowable expenditure.
The Capital Allowance Act of 2001 allows you to access tax relief on the purchase of assets that you are unable to post through the profit and loss account when producing your year end accounts. This is most commonly on the purchase of commercial buildings and is commonly missed by Accountants.
Tax Relief is accessed through making a claim to the revenue and will allow companies to get Tax Relief on the costs of certain assets.
You must be a UK taxpayer in order to make a Capital Allowance claim and this claim can be as much as 40% when purchasing a property that is either old, new or constructed by you. If the claim is on a renovation, extension or any other alteration’s this claim could potentially be even more than the 40%.
It is an Act brought in connecting to the Income Tax Act of 2007 and the Corporation Tax Act of 2009 and governs how companies must deal with Capital Allowances when claiming for tax relief.
This allows a company to claim tax relief on certain capital expenditure that a company makes. This tax relief is accessed by replacing depreciation and amortisation with Capital Allowances and will allow an individual or a company to claim income tax relief by reducing their taxable profits.
Most commonly tax relief can not be accessed all at once when the expenditure on the asset occurs and can be spread across a number of years. As capital allowances are a replacement for depreciation and amortisation the claim can vary in percentage across different assets.
Commonly Allowable Assets
- Commercial Buildings
- Plant and Machinery
- Research and Development
Commonly Non-Allowable Assets
- Land
The Capital Allowance Act of 2001 allows you to access tax relief on the purchase of assets that you are unable to post through the profit and loss account when producing your year end accounts. This is most commonly on the purchase of commercial buildings and is commonly missed by Accountants.
Tax Relief is accessed through making a claim to the revenue and will allow companies to get Tax Relief on the costs of certain assets.
You must be a UK taxpayer in order to make a Capital Allowance claim and this claim can be as much as 40% when purchasing a property that is either old, new or constructed by you. If the claim is on a renovation, extension or any other alteration’s this claim could potentially be even more than the 40%.
It is an Act brought in connecting to the Income Tax Act of 2007 and the Corporation Tax Act of 2009 and governs how companies must deal with Capital Allowances when claiming for tax relief.
This allows a company to claim tax relief on certain capital expenditure that a company makes. This tax relief is accessed by replacing depreciation and amortisation with Capital Allowances and will allow an individual or a company to claim income tax relief by reducing their taxable profits.
Most commonly tax relief can not be accessed all at once when the expenditure on the asset occurs and can be spread across a number of years. As capital allowances are a replacement for depreciation and amortisation the claim can vary in percentage across different assets.
Commonly Allowable Assets
- Commercial Buildings
- Plant and Machinery
- Research and Development
Commonly Non-Allowable Assets
- Land
Call us on 01384 376 964 for more information
Folkes Worton LLP Chartered Accountants
Focusing on Your Tax Requirements