Capital Allowances on Commercial Properties

The ability for businesses/property investors to claim capital allowances on fixtures contained within second-hand commercial properties has become more widely known in recent years, helped by the increase in number of specialist capital allowances practices (including our own!). Businesses have been able to make these claims many years after the property is bought.

What is less well understood is the fact that new rules are about to come into force which will have a fundamental impact on whether a successful claim can be made. From 1 April 2014 HMRC will introduce what is known as a ‘pooling requirement’. In essence, where a sale takes place on or after that date then for a buyer to be entitled to capital allowances on the fixtures the seller must generally have made a prior claim for allowances (regardless of whether they in fact utilise them).

Buying and selling a commercial property is therefore becoming more like buying and selling a used car. The buyer needs to carefully investigate the history of the property prior to agreeing to purchase. The seller will benefit from having the history available and being able to sell the property ‘with the advantage of capital allowances’ potentially enabling them to get more for the property.

The take home message is that the issue of capital allowances should be considered at the time of the sale negotiations, which is why we recommend seeking expert advice. Valuable tax relief could be lost if the matter is overlooked.

For further details please speak to our Capital Allowance Specialist, Tom Minnikin, or your usual Forbes Dawson contact.




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