Recent News - Are you optimising all of the tax relief on your fixed assets?

In today’s difficult economic times, many businesses are undertaking long overdue ‘housekeeping’ to ensure they are benefiting from all the cost savings they can achieve.

One area often overlooked are capital allowances which are available for expenditure incurred on certain fixed assets such as buildings, construction works and leasehold improvements. Maximising the available allowances can result in significant tax savings and for historic capital expenditure, potential tax repayments.

At Rushton we have teamed up with capital allowances specialist Capsure Tax to offer this important service to our clients to ensure they are benefiting from all the tax savings potentially available by undertaking a no obligation capital allowances review of their fixed asset additions.

Recent reviews have identified the following capital allowances opportunities for our Clients across a wide range of industries in relation to expenditure incurred on fixed assets including:-

• Property acquisitions
• Property refurbishment projects
• New build and premises extension projects
• Leasehold improvements

Every £1.0m of plant and machinery allowances identified will result in a 28% Corporation Tax Payer saving £280k over time.

Case Study A recent review of a Multi Screen Cinema Complex on behalf of a Cinema Operator Client identified an additional £550k of allowances which had been unclaimed by the client in relation to expenditure incurred during 2005 and 2006 and we submitted and agreed the extra over claim with HM Revenue and Customs which resulted in an immediate tax repayment of £110k and the client will benefit from a further £44k over time.

However, identifying the fixed assets which qualify for capital allowances is not straightforward. The rules are complex and often misunderstood and for second hand property acquisitions the claims can be severely restricted. In addition the capital allowances legislation changed dramatically in 2008 which has complicated matters further.

The amount of capital allowances available depends upon the plant and machinery content and use of the property by the Client. The main capital allowances available include plant and machinery allowances (PMA’s) and integral feature allowances (IFA’s) and for certain buildings, industrial building allowances (IBA’s) and long life asses (LLA’s).

An indication of the range of allowances for different property types is summarised below:-

If you are interested in a no obligation review of your fixed assets to establish if we can generate tax savings for your business, please contact Rebecca Fuller on 020 7490 3776 or Rebecca.Fuller@rushton.co.uk