Capital Allowances on Commercial Properties - New rules soon to come into force

Capital Allowances on Commercial Properties - New rules soon to come into force

From 1 April 2014 new rules will be introduced which will have a fundamental impact on whether a buyer of a second-hand commercial property can make a successful claim for capital allowances on fixtures contained within that building.

A new requirement was introduced, known as the ‘fixed value requirement’, from 1 April 2012, however a further requirement, known as the ‘pooling requirement’ will apply from 1 April 2014 which will further tighten up the rules for claiming capital allowances on second-hand fixtures.

Any one selling a commercial property after 31 March 2014 needs to ensure that they have claimed allowances on all fixtures and fittings to which they are entitled. Failure to do so could result in a potential buyer being barred from claiming allowances going forward. The claim by the seller does not need to be made before 31 March 2014 but does need to be completed prior to a sale.

Valuable tax relief could be lost if the pooling requirement is not met as the buyer will lose the ability to claim allowances in respect of those fixtures. It is important, therefore, to ensure capital allowances are considered prior to the sale or purchase of any commercial property.

Failure to address capital allowances prior to a sale could affect the sales value of the property if the purchaser is not able to claim any capital allowances on the second-hand fixtures.

If you would like more information or would like to discuss your tax affairs in general, please contact our Tax Partner, Chris Barrington on the details below:

Chris Barrington
telephone: 01942 292505