Commercial Property Owners face losing Millions due to Tax Law Changes

Posted on 8 March, 2014 by Jodee Redmond

Commercial Property owners stand to lose hundreds of millions of pounds because of an imminent change in the tax law. The rules on capital allowances will change in April, and tax specialists say this will lead to a fall in property valuations.

Commercial-Property-Owners-face-losing-Millions-due-to-Tax-Law-Changes

Property owners are currently able to claim tax relief on their spending on plant machinery and equipment, including air conditioning, lighting, lifts and carpets.

Up to 85 per cent of building fit-outs can be eligible for these capital expenditures, according to CBRE.

When a building is sold, there is currently no time limit in place for when the new owner is required to make a claim for these capital allowances. Starting in April, allowances will only be able to be claimed within the first two years after the property has changed hands. As a result, thousands of owners may miss out on millions of pounds in tax relief.

New owners buying commercial properties will not be able to claim tax relief in the future if a previous owner did not claim the capital allowance within the required two-year period. This could mean that potential buyers may offer lower prices to compensate for the lost relief.

According to Graham Burrell, CBRE’s head of capital allowances, many owners and investors were unaware of the change. He pointed out recently that this needs to be a priority as the deadline approaches. Anyone who plans to purchase a property after April needs to make sure they are aware of whether the capital allowances are still available.

HMRC made the change to curb the number of property owners making fraudulent tax relief claims, according to Neil Farquhar, the head of capital allowances at Savills. He points out that the legislation was meant to give tax relief on the commercial buildings once but what has been happening is that it has been abused over the years.

Mr. Farquhar also pointed out that the change could stall future sales. He said that it would hold up transactions because buyers would not know what the capital allowance status was with the buildings and that due diligence would need to be more thorough as a result.




Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Recent Posts

Interest Rates Impact on Commercial Property

Commercial Property Investment Outlook for 2023

The best places to stay on the Riviera

The latest property data has identified Newquay as the fastest property seller’s market in the UK

Investing in your garden can increase your property’s value

French Riviera temping high-end homebuyers

How can the ownership rights of my commercial property impact a business sale?

Should I incorporate virtual property viewings permanently?

Investment expected to increase across Asia-Pacific in 2021

UK property industry slows as the conclusion of tax break looms

BNP Paribas cautioned investors on Friday as debt-trading bonanza that increased its earnings this past year

Over 300,000 property purchases fell through in 2020 – we show the most frequent motives and the best way to get your house sale back on track

House Prices in the Capital Surpass £500,000

Optimism from the Bank of England’s chief economist

The most expensive commercial properties.

Businesses operating from shared premises will miss out on grants