Firstly let’s look at what capital allowances are and who is eligible for them:-
When a business is thinking about buying an asset which can vary depending on the industry the business is involved in but could include tools, plant and machinery, vehicles, or if certain businesses need to make alterations to a building to run their business properly (examples could include a care home or a dentist) they may be able to claim a capital allowance for that expenditure incurred.
Capital allowances can be a complex subject and having an understanding of how your business could benefit requires specialist advice to your specific situation and even if your business can’t claim capital allowance a future company may be eligible (i.e your business currently might be registered under a pension scheme and a future business may trade as a business). It is estimated that around 50% of businesses are missing out on the full benefit that capital allowances have to offer, with the right knowledge and understanding this could all change.
If after reading the above your business could benefit from capital allowances below is a good starting point of where you can identify areas where you could start to help alleviate the tax payable by your business:-
Areas to look at:-
Enhanced capital allowances – environmental based tax relief.
Disposal of assets
Acquiring new assets
Ongoing fixed assets
Plant and machinery is probably the most common for capital allowances claims, machinery has a clear list of areas that are applicable but plant is a little more harder to establish, but there is a list available under Section 23, List C Capital Allowances Act 2001 (CCA 2001) below is a small section of the list to give an overview of where capital allowance could apply to your business:-
Electrical systems (as well as lighting systems), cold water, gas and sewerage systems
Space and water heating, ventilation and air cooling and purification installations
Lifts, hoists or escalators etc
Thermal insulation
Demolition of plant or machinery
Alterations to include the installation of plant or machinery
Advertising; signs, displays and similar assets.
At any time a business should be aware of when it can benefit financially and in this case from tax relief and capital allowances it should look at the above areas and identify whether any assets they have falls into these categories and take the opportunity to claim for them.
Capital allowances have recently undergone a few changes by the current government so it is a good idea to get a current view of what is currently affected by capital allowances and where your business stands. Ideally speaking with a capital allowances consultant and talking through in detail about your business will be the way to understand what you are potentially entitled to.
This article is a guest post written by Helen Parker who has an understanding of taxation allowances and fiscal incentives and feels that more businesses could benefit from capital allowances.
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