Savings With Capital Allowances

Savings With Capital Allowances

In this case study, we explain how we helped one of our clients make a very significant corporation tax saving of £50k, along with subsequent yearly savings, by supporting them with a capital allowance claim. 

The company, a Yorkshire-based manufacturing business provides assistance to their clients with manufacturing projects, right through from the design phase to completing the end products. 

Due to the success of the business they outgrew their premises and moved to a new building, which they purchased from a developer, who fitted it out to meet their specifications. 

However, when the acquisition of the building took place, tax relief was not considered, and the business owner did not anticipate there would be any scope to save on tax once the building had been purchased. 

Solution

Upon speaking with Ascentis, we advised that they were in fact still eligible to claim capital allowance, especially in the area of “integral features” which essentially allows the purchaser in circumstances such as these to obtain tax relief on essential items such as:

  • air conditioning systems, cold water systems, hot water supplies, gas systems (if part of a space or water heating system) and central heating systems (including boilers, radiators, etc.)
  • burglar alarms, fire alarms systems; sprinklers & other equipment for extinguishing or containing fires
  • carpets
  • cupboards and any fitted kitchens or bathroom suites including white goods within these
  • display equipment
  • electrical installations
  • furniture (fitted)
  • lighting systems
  • partitions, but only if moveable and intended to be moved
  • shelving
  • lifts (but excluding the cost of the lift shaft which cannot be claimed)
  • external solar shading
  • floor strengthening required to accommodate heavy machinery

Having completed the construction and sale of the building the developer was unwilling to supply a bill of quantities showing a cost breakdown of the items contained within the building. Ascentis therefore worked alongside a Quantity Surveyor in order to obtain valuations of all of the above items in the building so the costs could be assigned to quantify the claim.< The cost of the building when purchased was £1m and it was identified the cost of the items qualifying for capital allowances came to £265k. With this information, we could then support the business in making the capital allowance claim. 

Value Impact

The capital allowance claim generated a corporation tax saving of £50k in the first accounting period in which it was submitted, and subsequent claims for annual structures and buildings allowance have generated smaller savings of £5k per year.