Commercial Property Buyers, Ensure You Get Your Capital Allowances!

In April 2014, changes to the capital allowances requirements for commercial property buyers will come into effect. Capital allowances are an invaluable form of tax relief when it comes to the construction or second-hand purchase of commercial property.

One such change is to the rules regarding  commercial property with plant and machinery fixtures.

Currently a property buyer can claim capital allowances irrespective of whether the seller has made a claim in the past, but as of April 2014 there will be a new ‘Pooling Requirement’. This requires that the seller has ‘pooled’ the capital allowances qualifying expenditure (i.e. on fixtures for machinery) and notified HMRC in a tax return.

This can be completed any time after the seller has bought or constructed the property, but must be done before the property is sold on. Since many sellers may not have claimed capital allowances, the onus will now fall almost entirely on the buyer to convince the seller to ‘pool’ their qualifying expenditure, otherwise capital allowances will never be available to the current and subsequent owners. As regards the seller, a property on which allowances can be claimed by a future purchaser will fetch a better price than one on which the allowances can’t be claimed.

If you are buying a property that meets the criteria for this new ‘pooling’ requirement, or have a property on which you may not have claimed all the available allowances,  Alexander & Co can advise you on the correct action to take, in order not to lose out