Buying a commercial property? If so, are you aware of capital allowances?

Capital allowances are a form of tax relief available to those incurring capital expenditure when buying or building a commercial property.

If you are buying a leasehold property, the landlord may still be willing to let you take the benefit of these allowances although this is less common.

If capital allowances have been claimed by the seller, you will want to take as much of the benefit of these allowances as you can. Even if the seller hasn’t claimed any allowance, you may still be able to. Obviously if you are the seller, you will want to try to keep as much of the allowance as possible.

Capital allowances can significantly boost the post-tax yield on an investment so it is important to get as much information about this as possible.

If you are not a UK tax payer, you will still need to deal with the issue of capital allowances because when you sell the property, the question will arise and having no information may affect the price you are able to achieve.

There are very specific timescales which need to be met to claim allowances following completion. If you agree an election (and we would strongly advise that you DO NOT do this without taking specialist advice), you may wish to also make an application to the tribunal dealing with capital allowances to protect you if the election notice is rejected.

Whilst we can’t actually advise you on how to claim capital allowances, asking the question about which capital allowances have been claimed in relation to the property should be something you do early on because they can form part of the price negotiations.

It’s usually best to ask your accountants to talk to each other and then, if necessary, take advice from a capital allowances consultant.

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