What Are Capital Allowances?


Capital allowances are a valuable form of tax relief available to any entity incurring capital expenditure by buying, building or renovating commercial property. Capital allowances become available when a commercial property is acquired for use in the course of a trade, or in the course of a property investment business.

Capital allowances have the effect of reducing the taxable profits attributable to the property; you are also entitled to claim on new-builds, extensions and refurbishment works undertaken on a commercial property. In many cases they can create a tax loss that can be relieved by the owning entity against other income.

Pali has partnered with Catax Solutions to enable you to order a no obligation, free capital allowance analysis via the Pali website, in seconds. By answering a few basic questions you will not only be fulfilling your due diligence obligation but it could result in your client claiming back valuable tax relief.

Why do we need to consider this for our clients?
In April 2014, changes were made to capital allowance rules. Whether you are acting for the seller or purchaser, you should raise the issue of CAs with your client as early as possible. Failing to do so could result in delays or financial loss to your client. If you are unsure about how to go about this, don’t worry, simply contact Pali and we’ll take care of everything for you. Commercial property lawyers could face future action for negligence if they fail to advise clients about impending tax relief changes.

To read the Law Society’s Practice Note on Capital Allowances please click here