The biggest cause of stress in Jordans’ commercial property department in recent months has been the changes in Capital Allowances that have had us checking and revising the advice we give to clients.

If you own (or have a long term lease) on a commercial property then you can claim tax relief on items that form part of the infrastructure and services within that building. The average claim is currently worth around £125,000 yet 90% of all commercial property owners have made no effort to check if they are eligible.

The changes to the capital allowance regulations made by the Finance Bill 2012 came into force in April 2014 and make it mandatory to document the asset pool at the time of the transfer of a property regardless of whether capital allowances have been claimed or not. Any asset values that aren’t documented at the point of transfer will no longer be eligible for capital allowances in the future. In short if the buyer does not ensure that the seller follows the correct procedure during the transfer of the property they risk losing a potentially valuable claim forever.

In an effort to avoid this possibility Jordans have introduced new procedures when acting in the sale and purchase of commercial property to ensure that capital allowances are dealt with properly. As part of these new procedures, guides to capital allowances will be sent to all clients at the start of the transaction.

However once a commercial property owner has agreed a sale it may be too late to start thinking about integral features, they could be faced with a choice of delaying (and possibly losing) the sale or writing off a tax benefit that is typically worth an average of £125,000 in properties over £500,000. Any commercial property owner who is unsure about capital allowances should consult their financial advisor well in advance of any planned sale.

Please see our Capital Allowance – Advice for Purchasers and our Capital Allowance – Advice for Sellers guides.

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