Can you save tax with your Commercial Property?

At Torr Waterfield, we have always been struck by the fact that some taxpayers are attracted to all sorts of weird & wonderful tax savings schemes, often read about in the press, whilst ignoring basic ways to ensure that their tax bill is no more than it should be.

In this article, we examine one of these tax saving measures, which is to make full use of Capital Allowances on Commercial Property, which could result in a tax refund or reduced tax liabilities in the future.

What are capital allowances within a Commercial Property?

Every commercial property will have items within the purchase of the building from which capital allowances can be claimed. Often these items are never separately detailed in the purchase, but they are there! Providing that the value of these items is large enough, a capital allowance tax claim will be beneficial.

Capital allowances can be claimed for many types of these assets, some of the most common found within a property being:

  • electrical power and lighting;
  • hot and cold water systems;
  • heating, ventilation and air conditioning systems;
  • sanitary installations;
  • fire alarms and security alarms;
  • lifts;
  • furnishings and fittings.

What is the potential benefit?

The tax savings available will depend on your tax rate and the amount of 'plant and machinery' in the property you are buying.

Every case is different. But claiming capital allowances can typically save 5-10% of the cost of buying or building a property, or 15%-30% of the cost of a fit-out or refurbishment. To illustrate, if you spend say, £200,000 on a commercial property then claiming capital allowances could save tax of £10,000 to £20,000 (and potentially more).

Recent local projects that our clients have benefitted from are:

  • the purchase and fit-out of warehouse and office premises in Leicester Forest East - tax saving £30,000
  • the purchase of office premises in Aylestone - tax saving £22,500
  • the purchase of 3 commercial units for let in Leicester city centre - tax saving £27,500

What should you do?

Speak to us if you own a property and would like to explore a retrospective capital allowance claim. If you are considering buying a commercial property we would recommend contacting us sooner rather than later to ensure that this tax claim can be maximised.

Tom Simpson

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