Claim your capital allowances tax benefit
What Are Capital Allowances?
As a UK taxpayer, Capital Allowances may be able to help you reduce your taxable profits. This is because they allow you to claim tax relief on your expenditure on Commercial Property—usually items of plant and machinery within the fabric of the building. These are often taken for granted within the overall purchase price of the property.
After a thorough investigation of the property's tax history, a value is attributed to pieces of equipment that are integral parts of the building. These items are often replaced during major renovations or when they break down, and the value of these items can be written off against taxes through your renewal, refurbishment, or capital account. This includes things like radiators, heating systems, wires in the walls, switch gear, alarms, toilets, sinks, basins, door furniture and cabling among many other pieces of equipment.
What could this allowance be worth?
Capital allowances are based on the type of business use and property. A typical project may claim up to 50% of the purchase price or build cost as an allowance, which can be used to reduce your income and corporation tax liability. If you have already paid tax on the money you have invested, you could get a refund from HMRC.
How is this allowance used?
Your accountant could use up to 18% of your total tax-allowable expenses to reduce your annual income tax bill. For example, if you have £100,000 of allowable expenses and you receive a £18,000 tax reduction as a result, you will save £7,200.
Could I lose the allowance?
In short – yes. If you sell your dental practice and you haven't claimed your allowances, your solicitor will ask if the allowances have been completed ask if you would like to pass on any unused allowances to the new owner. If they're not, you could be forced into doing so by the purchaser.
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