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Capital Allowances Tax Relief

Mortgage Blog: Latest News - 09-01-2025 - - 0 comments
Capital Allowances Tax Relief

The best kept secret in property tax

When you buy a capital asset - like a machine for your business - you cannot deduct its cost to reduce your tax bill. Instead, you may be able to claim capital allowances. Capital allowances extend to the fixtures you acquire with a commercial property. Fixtures include the electrical, heating and ventilation systems, kitchens, sanitaryware, alarm systems, etc. In other words, if you were able to turn your building upside down, its fixtures and fittings would not fall out.

As a complex area of UK tax legislation, most property owners are unaware that they are eligible to claim tax relief on part of the price they paid to buy their business premises. This is for the embedded fixtures and fittings that were already within the fabric of the building at the time of purchase.

How much tax can be saved?

A claim on these fixtures could represent a substantial tax saving and, in most instances, cash repayments of tax from HMRC. It's common that between 20 percent and 40 percent of the cost to buy or build the property will qualify for capital allowances. But it's important to mention that not every property acquisition will be due tax relief.

Why accountants don't claim this

Identifying the value of embedded capital allowances for the purchase, refurbishment and construction of a business property is a complex area of tax legislation. So much so, it is often misunderstood or overlooked by generalist accountants. Claiming capital allowances on embedded fixtures purchased with land & buildings goes beyond the skills of accountants. This is due to the need for surveyors and expert tax knowledge. Even if your accountant has made a claim, it can often be increased.

Get in touch with our friendly and knowledgeable team for more information.

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