Fistful of Dollars

Alun Oliver and Rupert Guppy explain how advisers can optimise their clients’ capital allowances claims on second-hand property transactions. Our article was published in the 30 July 2015 issue of Taxation magazine.

​Businesses incurring capital expenditure will typically depreciate the cost of the asset over its expected life and this deduction in the profit and loss account will reduce accounting profits. However, it is a well-established general principle that no tax deduction is allowable for expenses of a capital nature (ITTOIA 2005, s 33 and CTA 2009, s 53); instead, relief is granted for certain expenditure as capital allowances.

Capital allowances is a complex subject and they may be overlooked because difficulties arise in identifying qualifying expenditure. Generally, there is no prescribed list of qualifying assets, so practitioners must instead rely on a combination of legislation, precedent case law and published HMRC guidance. In addition, there are myriad rates at which relief is granted and this can cause further confusion.

​​The common themes that connect all of points highlighted in this article are value and awareness. Our experience is that most businesses could benefit from a review of their capital allowances position so that they do not waste that fistful of dollars.

This article was published in Taxation in July 2015.

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