Capital Allowances

Capital allowances are a relief from corporation or income tax and are based on the capital expenditure incurred on the provision and installation of certain assets within a building, usually plant and machinery, as well as on various types of properties, including certain industrial buildings, hotels and others.

Every building contains an element of plant and machinery, which will qualify for capital allowances, such as heating and air conditioning, certain electrical installations, hot water and sanitary ware, lifts, fire precautions and emergency lighting to name just a few. However, other less obvious assets will also qualify, for example carpet, security equipment, furniture and fittings.

Where buildings or structures are concerned, there is often very significant scope for increasing capital allowances by proper planning. The tax savings resulting from such an exercise can be too great to ignore.

By claiming capital allowances you are easing your tax burden, thereby improving the net return of a property and increasing cash flow. Capital allowances planning should therefore form a vital part of ensuring the viability of any property transaction.