Capital Allowances on Fixtures

There are a number of capital allowance claims firms targeting businesses which have recently bought or sold commercial property. These 'experts' suggest the business needs to pay for a special survey to claim all the capital allowances they are entitled to, and this must be done quickly in order to claim all the allowances due.

In most cases a special survey is not needed. However, it is true that for commercial building sales made since 1 April 2012 the vendor and purchaser must take formal steps (usually an election) to agree the value of fixtures included in that building. This value must be agreed within two years of the transfer of ownership. If agreement cannot be reached the two parties can go to the tax tribunal where the judge will make a decision.

The agreed value for fixtures is brought into the capital allowance pool as the disposal value for the vendor and is added to the capital allowance pool for the purchaser.

There is another change on its way for transfers of commercial buildings from April 2014. The value of fixtures and fittings must be claimed as part of a capital allowances pool by the vendor in an accounting period prior to the sale of the building. If the vendor does not make this claim, the purchaser is barred from claiming any capital allowances for the fixtures it acquires.

We can help you make the necessary elections and claims for capital allowances.

Capital Allowances for Holiday Lets

Do you own a property that qualifies as a furnished holiday let (FHL)? To qualify the property has to be commercially let for short periods for at least 70 days per year, although this minimum will increase to 105 days from April 2012. There are also some other conditions.

If your property does qualify as a FHL, have you claimed tax relief for all of the equipment included in and attached to that property? FHL properties have advantageous tax rules that permit capital allowances to be claimed for the cost of equipment used in the building, which is not the case for other let residential property.

Since April 2008 it has been easier to claim capital allowances on a range of items attached to buildings that qualify as integral features in addition to the usual fixtures that qualify.

For a typical FHL property capital allowances may be claimed on the following fixtures...

- Bathroom fittings
- Dishwasher
- Cooker
- Fridge-freezer
- Central heating
- Fitted carpets
- Swimming pool

For a new property with fitted kitchen, bathroom and carpets that cost £235,000, perhaps £25,000 would relate to the built-in fixtures. In addition you can claim capital allowances on the cost of furniture and curtains you provide in the property.

Capital allowances must be claimed in your tax return. A capital allowances claim for the tax year 2009/10 should have been included in your tax return submitted by 31 January 2011, but that return can be amended to include a claim before 31 January 2012. If the property is used for private purposes the capital allowance claim must be amended to reflect that private use.

A word of warning: HMRC is considering whether it will continue to accept claims for capital allowances for FHL properties following a Brief it released on 22 October 2010. Clarification of the meaning of this Brief has been requested by the Chartered Institute of Taxation, but has not been provided. In the meantime, if you don't claim, you don't get the tax relief.