Capital Allowance Related Posts

• Small Business Tax & Finance Newsletter – Portal Tax Claims Media Coverage

  Independent Newsletter for Accounting Professionals and Taxation Advisor's [gallery link="file"]   ...Read more

Independent Newsletter for Accounting Professionals and Taxation Advisor’s

Capital Allowance Related Posts

• Just Fixing The Leak

  [gallery link="file"] ...Read more

Portal Tax Claims have once again jumped ahead of the curve with the introduction of its expert online case tracking system enabling clients to follow the progress of their cases anytime, anywhere. Used internally by the firm for a number of years, the bespoke computerised case management system known as Solcase Online has finally been made available and visible to all clients who log in to the Portal Tax Claims site, allowing them to track the progress of their claim.

The advanced system shows clients exactly what work has been done on their case so far. It shows any important upcoming dates (such as surveys or report due dates) and allows them to contact the administrator overseeing their case directly by delivering a message straight into their “to do” list allowing clients to feel safe in the knowledge that their message will always be received.

The new online case tracking system is just a small part of Portal Tax Claims continuing commitment to the industry and to their clients where they seek to provide the highest level of client care and quality of service around.

Capital Allowance Related Posts

• Portal Tax Claims appoints top capital allowance specialist

  Portal Tax Claims, the capital allowance claims specialist, has appointed Jeanette Edmiston, probably the UK’s top capital allowance adviser, to head up its report team. Jeanette, who is a trained tax specialist...Read more

• Portal Tax Claims has recently become a Patron of The Parents Consortium

  Portal Tax Claims has recently become a Patron of The Parents Consortium which was founded in 1996 and is a charity supporting disabled children and their families. They are locally based...Read more

As property owners look to reap returns from their UK homes, many are forgetting that they may be owed substantial amounts of cash from their offshore properties.

Those who own furnished holiday lets, both in the UK and within the European Economic Area, could be entitled to claim large sums of money through sizeable capital allowances.

This comes down to the fact that despite the relatively small income that is generated from a furnished holiday let, it is still classified as a commercial property and therefore the owner is still entitled to claim.

Considering the current state of the European property market, this is good news for the majority of furnished holiday letters.

The conditions in Spain, where huge numbers of Brits currently own property, are among the worst and there are currently an estimated 700,000 empty new homes in the country.

The message then to the Brits who have held on to their overseas property through the financial turmoil is to claim back what is rightfully yours, before the opportunity is gone.

By Katie-Jill Rowland

About Portal Tax Claims LLP

Portal Tax Claims is a specialist capital allowance claims company which is part of the Portal Group that works in collaboration with your existing advisers to identify and create retrospective and current capital allowance claims that lead to significant tax refunds

Capital Allowance Related Posts

No related posts.

In a separate article, we looked at First Year Allowance (FYA) that typically involves allowing taxpayers to write off a percentage of the expenditure of providing a capital asset in the year it was acquired. Writing Down Allowance (WDA) is different in that you can claim up to a set percentage of the balance (such as 20%) to be claimed as capital allowance each year. The allowance is calculated on the written-down value, i.e. original cost minus all the capital allowances claimed in past years.

The above practice is clearly evident in the case of single assets. In the case of these assets, when the asset is disposed off, the disposal value is compared with the written down value and a “balancing adjustment” is made. If the disposal value is higher, the excess capital allowance claimed in past years is added back in current year as “balancing charge.” If the disposal value is lower than the written down value, the difference in value is allowed to be claimed in that year as “balancing allowance.”

The scenario becomes somewhat complex when more than one asset is “pooled” for capital allowance purposes. Pooling involves adding expenditure on new assets to the pool total and deducting disposal proceeds from the total. If disposal proceeds exceed the expenditure in the pool, the excess is added to income as balancing charge.

Balancing allowances are not allowed in the case of pooling until the qualifying activity ends. At that time, any remaining qualifying expenditure in the pool is allowed as a balancing allowance.

Certain assets are required to be accounted separately for capital allowance purposes. These are single asset pools, and either a balancing charge or balancing allowance can arise when the asset is disposed off. Assets to be maintained as single asset pools include:

• Cars above the cost threshold where the expenditure was incurred before 1 April 2009 (where the taxpayer is within the charge to corporation tax) or 6 April 2009 (where the taxpayer is within the charge to income tax) CA23500;
• Short life assets CA23600;
• Ships CA25000;
• Assets used partly for other purposes CA27000;

There can be more than one multi-asset pools and the long-life asset pool is of particular significance for property businesses. We will look at the issue in a separate article.

Capital Allowance Related Posts

• Plant & Machinery Disposal Events

  In other articles we have seen that when a disposal event occurs, taxpayers are subjected to a balancing charge or allowed a balancing allowance. A balancing charge involves charging back excessive...Read more

• Claiming Capital Allowances

  Capital allowances can be claimed on: Plant & Machinery: Equipment & Tools, Vehicles, Ladders, Computers and Business Furniture Industrial buildings Agricultural buildings Leased out buildings subject to conditions Allowances can be claimed only on the original...Read more

• Claiming Mineral Extraction Allowances

  In a separate article, we noted that persons engaged in the trade of extracting different kinds of deposits from the earth, such as sand/gravel, oil and hard rock or in the...Read more

• Plant and Machinery Allowance

  Plant and Machinery allowance is available to persons engaged in qualifying activities, which is very wide in this case. Trade, profession, vocation, office, employment and Schedule A business (property rentals etc)...Read more

• Claiming Business Premises Renovation Allowance

  In a separate article, we looked at expenditure that can be claimed as Business Premises Renovation Allowance (BPRA). It was noted that BPRA can be claimed on expenditure incurred for converting...Read more

• Plant and Machinery Allowances and Fixtures

  Plant and Machinery Allowances (PMA) can typically be claimed only by the owner of the asset. However, in hire purchase contracts, the hirer can claim PMA on the hired asset even...Read more

• Capital Allowance Claims and Property Sales

  If you are a property owner who has claimed capital allowances, you should carefully review the possibilities and arrange things in a manner to retain the tax savings you had received...Read more

Where a fixture goes along with the leased property to a lessee, the owner of the fixture is determined by the particular facts of the case.

Where the lessor was or would have been entitled to claim PMA on the fixture, and the lessee pays a premium for the lease that is treated as capital expenditure for the fixture, the lessor and lessee can elect to treat the lessee as the deemed owner of the fixture. If such an election is made, the lessee becomes entitled to claim PMA on the fixture.

The lessor will then show a disposal event for the fixture.

On the other hand, if the lessor was not entitled to claim PMA on the fixture, then the lessee, who carries on the qualifying activity in which the fixture is used, will be treated as the owner of the fixture entitled to claim PMA. This usually happens when the lessor is holding the fixture in a trading capacity and not for a qualifying activity.

If it so happens that the PMA has already been claimed by another person entitled to claim it, for example, if the lessor had earlier leased the fixture to a person carrying on a qualifying activity (and claims PMA on the fixture), and subsequently grants a superior lease to another person, this latter person will not be entitled to claim PMA on the fixture.

Where a lessee incurs expenditure on installing a fixture, and the lessor makes a contribution towards the cost, the latter can claim PMA on the contribution if the lessee, who is the deemed owner of the fixture, is entitled to PMA.

It will be noticed that the rules relating to PMA are more than a bit complex. Taxpayers should consult a specialist on capital allowances for immoveable property to ensure that they claim what they are entitled to.

Capital Allowance Related Posts

• Owner of Fixtures: Elections between Lessor and Lessee

  A lease can be of a building or land which is received by the lessee along with several permanent fixtures forming part of the asset. Alternatively, the lease can be an...Read more

• Plant and Machinery Allowances and Fixtures

  Plant and Machinery Allowances (PMA) can typically be claimed only by the owner of the asset. However, in hire purchase contracts, the hirer can claim PMA on the hired asset even...Read more

• Capital Allowances Claim on Fixtures

  Fixtures are Plant and Machinery that have been permanently fixed to a building or land and enhances the value of the building or land. Plant and Machinery Allowances (PMA) can be...Read more

• Plant and Machinery Allowance for Hire Purchases

  The general rule is that only the owner of an asset can claim capital allowance on that asset. In the case of hire purchase, the person hiring the asset does not...Read more

If you are a property owner who has claimed capital allowances, you should carefully review the possibilities and arrange things in a manner to retain the tax savings you had received from the capital allowance claims. If you have not claimed capital allowances, but could have claimed it under relevant rules, you could explore the possibility of passing on the claims to the buyer and negotiating a higher price.

Capital allowances are claimed on the fixtures that form part of the building at rates applicable to plant and machinery. To make the claim, the value of these fixtures should be determined in a manner acceptable to HM Revenue. This can be done in different ways depending on the context.

If the seller has claimed capital allowances, the person can indicate the disposal value of the fixtures in the sale contract. This can be through an Election Notice under section 198 of the Capital Allowances Act 2001 or by a fair apportionment of the sale price under section 196. The price of fixtures so apportioned cannot exceed the cost of the fixtures to the seller.

Claiming capital allowances results in the value of the fixtures being “written down” for tax purposes. If the disposal price of fixtures on a sale as above exceeds the “tax written down value,” then the seller will be liable to make good the excess allowance the person has claimed through a “balancing change.” This will result in paying additional tax over and above the tax on income that year.

By opting for a different way of apportioning the disposal value of fixtures, sellers can avoid balancing charges and the additional taxes. Such a different apportionment is possible by electing to show the disposal value of the fixtures at a low figure that is either equal to the tax written down value or lower.

However, a low disposal value for the fixtures will mean lower capital allowance claims and consequent tax relief for the buyer. It is in this context that the buyer might be willing to pay a higher price for the property in return for a higher disposal value.

Capital Allowance Related Posts

• Capital Allowance Claims and Property Sales

  If you are a property owner who has claimed capital allowances, you should carefully review the possibilities and arrange things in a manner to retain the tax...Read more

• Capital Allowance Claims: More on Section 198

  When a person engaged in a “qualifying activity” as defined under section 15 of the Capital Allowances Act sells a building, it can have very serious tax implications both for the...Read more

• Tax Relief through Capital Allowance Claims on the Property that You Own

  If you are a company, partnership or individual who has purchased a property, and are not engaged in property trade, you can claim capital allowances in respect...Read more

• Capital Allowance Claims and Tax on Furnished Holiday Lets

  If you are a person who owns furnished holiday lets in UK or Euro zone, you can reduce the tax you pay not only on the rents of property but also...Read more

A lease can be of a building or land which is received by the lessee along with several permanent fixtures forming part of the asset. Alternatively, the lease can be an equipment lease for plant and machinery purchased by a lessor and leased out to a lessee. The plant and machinery then becomes a fixture to a building or land used for carrying on a qualifying activity.

In the case of equipment lease mentioned above, the lessor and lessee can jointly elect to treat the lessor as the owner of the fixture provided certain conditions are met. These conditions are:

• The lessee is carrying on a qualifying activity and the leased equipment is used in this activity
• The lessee would have been entitled to claim PMA if that person had incurred the expenditure for providing the equipment
• The plant and machinery becomes a fixture by being fixed to land that is neither a building nor part of a building
• The lessee has an interest (including lease) in the land
• The lessor is entitled to sever the fixture at the end of the lease period and the severed fixture can then be used at another premises for the same purpose
• Under the lease agreement, the lessor will own the equipment on its being so severed
• The lease is one that comes under the category of an “operating” lease (as distinct from a “financing” lease) and
• The plant and machinery is not intended for use in a dwelling house

A similar election can be made where:

• An energy services provider provides plant and machinery that becomes a fixture in a relevant land
• The client of the provider has an interest in the relevant land and the provider doesn’t have such interest
• The provider or a person connected with the provider operates the plant and machinery for the client and
• The plant and machinery is not provided for leasing or for use in a dwelling house

If elections are made as above, the lessee (or client in the case of energy services) will not be treated as the owner of the fixture under section 176 of the Capital Allowances Act 2001 for claiming PMA.

Capital Allowance Related Posts

• PMA on Fixtures already Installed on Leased Land or Building

  Where a fixture goes along with the leased property to a lessee, the owner of the fixture is determined by the particular facts of the case. Where the lessor was or would...Read more

• Plant and Machinery Allowances and Fixtures

  Plant and Machinery Allowances (PMA) can typically be claimed only by the owner of the asset. However, in hire purchase contracts, the hirer can claim PMA on the hired asset even...Read more

• Capital Allowances Claim on Fixtures

  Fixtures are Plant and Machinery that have been permanently fixed to a building or land and enhances the value of the building or land. Plant and Machinery Allowances (PMA) can be...Read more

• Plant and Machinery Allowance for Hire Purchases

  The general rule is that only the owner of an asset can claim capital allowance on that asset. In the case of hire purchase, the person hiring the asset does not...Read more

• s198 Election

  S198 Election - CA26800 - PMA: Fixtures: Election to fix apportionment S198 Election - CAA01/S198 - S200 S198 Election - Where an interest in land that includes a fixture is sold, the buyer...Read more

• FLA urges Treasury to extend green tax relief

  The Finance and Leasing Association (FLA) is calling on the Treasury to extend tax relief on energy efficient equipment to the asset finance sector. The association believes that the extension would benefit...Read more

£1.2 billion tax breaks missed

Lancashire businesses are missing out on more than £1.2 billion of tax breaks, according to an expert.

Shaun Murphy, chief executive of tax return claim specialists Portal Tax Claims, said that more than 30,000 business bosses who own their own properties could be owned an average refund of £105,000 in capital allowances.

He said this meant that for business owners with in the 40% tax band, this worked out to £1.2 billion in refunds.

The expert said: “literally billions of pounds are due to commercial property owners across the UK, but most lack the necessary expertise to make the claim.”

Capital Allowance Related Posts

• PIR Hospitality Business Article

  Portal Tax Claims, a specialist capital allowance claims company, aims to help commercial property owners, including hotel owners, claim back £5 billion worth of tax, in the next 5 years, through...Read more

Portal Tax Claims has appointed Jeanette Edmiston to head up its report team. She has 25 years’ experience in the construction industry and corporates, and joins from KPMG. She also worked at Deloitte, where she was responsible for building up the capital allowances team.

Capital Allowance Related Posts

• Portal Tax Claims appoints top capital allowance specialist

  Portal Tax Claims, the capital allowance claims specialist, has appointed Jeanette Edmiston, probably the UK’s top capital allowance adviser, to head up its report team. Jeanette, who is a trained tax specialist...Read more