Capital Allowances
Capital allowances represent one of the most powerful, yet frequently under-utilised, forms of tax relief available to UK businesses and investors. They enable the cost of qualifying capital expenditure on commercial property, plant and integral features to be written down against taxable profits, delivering substantial cash-flow savings and improving the post-tax return on investment.
Property & Land Tax Relief Advisory - Capital Allowances:
Types of Capital Allowances
The capital allowances regime distinguishes between various categories of qualifying expenditure, each with its own legislative framework and tax treatment. The main categories include:
Plant & Machinery Allowances (P&M):
Covering assets used for the purposes of the trade, from electrical and mechanical installations to specialist equipment, fixtures and fittings.
The challenge lies not merely in identifying obvious items, but in correctly apportioning embedded expenditure within construction or acquisition costs.Integral Features (IFAs):
Defined under s33A CAA 2001, covering systems such as electrical, cold water, heating and air-conditioning installations.
These often form a significant proportion of qualifying expenditure within a commercial building but are frequently overlooked or misclassified by non-specialists.Structures and Buildings Allowances (SBA):
Introduced in 2019 (and enhanced from April 2020), this relief provides a flat-rate writing down allowance for qualifying structural expenditure.
While less generous than P&M allowances, SBAs can materially improve the tax efficiency of large-scale developments, refurbishments and fit-outs when integrated with a broader capital allowances strategy.Enhanced Capital Allowances (ECAs) and Full Expensing:
The introduction of Full Expensing (100% immediate deduction) for qualifying main-pool assets, alongside the continuation of the Annual Investment Allowance (AIA), offers unprecedented flexibility for planning capital investment.
Understanding interaction rules, such as the exclusion of certain leased assets or the apportionment across group entities, is critical to maximising benefit without triggering clawback.
When Can They Be Claimed?
On acquisition of second-hand commercial property
On new builds, extensions or refurbishments
On fit-outs, developments or conversions of commercial properties
Retrospectively on unclaimed historic capital expenditure
Our Approach:
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1. Initial Consultation & Information Gathering
· Understanding Your Investment: We start by engaging with you to understand the specifics of your building or structure investment, including the nature of the property, the purpose of the investment, and the associated expenditures.
· Document Review: Our team will review all relevant documentation, such as purchase invoices, architectural plans, construction contracts, and any other records that detail the investment in the property.
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2. Site Survey & Assessment
· Comprehensive Site Survey: To ensure all qualifying expenditures are identified, we conduct a thorough on-site survey of your property. Our experienced surveyors will assess every aspect of the building or structure to identify all capital allowances opportunities.
· Detailed Assessment: During the survey, we examine elements such as the building's fabric, fixtures, and fittings. We document these elements in detail, considering factors like the building's age, condition, and any previous renovations or alterations.
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3. Analysis & Categorisation of Expenditures
· Cost Breakdown: Our team will meticulously analyse the data collected from the site survey and document review. We categorise expenditures into qualifying and non-qualifying items, ensuring accuracy in your claim.
· Identification of Qualifying Assets: We identify assets that qualify for different types of capital allowances, such as Structures and Buildings Allowances (SBAs), Plant and Machinery Allowances, and Integral Features Allowances.
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4. Preparation of Capital Allowances Report
· Comprehensive Report: Based on our analysis, we prepare a detailed capital allowances report outlining all identified qualifying expenditures and the corresponding allowances. This report serves as the basis for your claim.
· Clear Documentation: Our report includes clear documentation and justification for each claimed item, ensuring compliance with all relevant tax laws and regulations.
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5. Internal Westlock Partners Review & Client Approval
· The Westlock Approval: Before finalising your Capital Allowances report, all calculations and supporting evidence are reviewed by a senior specialist, independent of the drafting team. This ensures accuracy, objectivity, and full compliance with HMRC guidance. Any issues are resolved prior to sharing the report with you for approval.
· Client Review & Approval Process: We provide the capital allowances report to you for review and feedback. We will address any queries or concerns you may have, ensuring you are fully satisfied with the report before submission. Once we have received your approval, we will proceed with the submission of the claim.
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6. Submission & Follow-Up
· Claim Submission: We assist you in submitting the capital allowances claim to HMRC, ensuring all necessary forms and documents are included.
· Follow-Up Support: Our team remains available to provide support and answer any questions from HMRC regarding your claim, ensuring a smooth and efficient process.
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7. Ongoing Monitoring & Updates
· Monitoring Changes: We keep abreast of changes in tax legislation and ensure your capital allowances claims are up to date with current laws and regulations.
· Future Claims: As your business continues to invest in property and structures, we are here to assist with any future capital allowances claims, ensuring you maximise your tax benefits.
Further Reading & Resources
Get in Touch
If you’ve recently acquired, built, renovated, or fitted out a commercial property, you may be sitting on valuable capital allowances that remain unclaimed.
At Westlock Partners, we work closely with businesses, investors, and property professionals to uncover and maximise these tax relief opportunities, often delivering substantial cash flow benefits with minimal disruption.
To find out how we can help you unlock hidden value from your property expenditure, speak to our team today.