Ask the experts – Stephen Long, Reclaiming capital allowance
We heard about a little known tax relief that is often unclaimed by people owning a second home overseas or a commercial property in the UK. We decided to ask tax expert Stephen Long of capitalallowancerebate.com for a more information and how to claim a capital allowance rebate…
Hi Stephen, so what exactly is a Capital Allowances rebate? Hi, if you own a commercial property in the UK or an overseas property which you let out for rental income there is a distinct possibility you are entitled by right to reclaim capital allowances historically unclaimed on your unit. This is a specialist area requiring expert surveyors.. Most property owners simply assume that all capital allowances are the responsibility of their accountant to claim or offset. This is not the case and most owners are entitled to receive a rebate yet unclaimed on each unit owned.
So is a holiday home classed as commercial property and how would you know if you qualified for a capital allowance rebate? For tax allowance purposes [yes] a property overseas is classed as commercial, there is a basic criterion: The property must be a furnished holiday let in the UK or an EU country. The owner must be a UK tax payer. The rental income must be declared on your tax return. The property must be let out for more than 70 days each year and available for more than 140 days per year. The property can be anything from an apartment to a villa although the purchase price must have been at least £300,000 on an overseas unit.
What exactly would you claim on? For commercial property and holiday homes you can claim on:
- Plant & Machinery strip out
- Heating Installations
- Gas and Electrical Installations
- Electrical Appliances
- Protective Installations
- Communications Installations
- Security Installations
- Hot & Cold Water Installations
- Ventilation & Air Con Installations
- Internal Fittings the list is long and varied; go to www.capitalallowancerebate.co.uk/qualifications.php to get a basic overview.
How much money would you generally look to claim? Is there a recent example of a claim on a holiday home or UK commercial property? The typical values of capital allowances for qualifying furnished holiday homes would typically be between 15% and 35% of the purchase price of the property. For a higher rate tax payer this could be worth up to 17.5% of the purchase price. For example, for a property acquired for £300,000 the total reduction in tax could be £52,500! As an examle in the UK; there was an office purchased in 2004 for £1.6 million. Machinery and plant allowances identified £307,000. The tax saving in year 1 was £23,000 and the total saving is £92,000!
It all sounds very straightforward, is there a catch? There is no catch but likewise there are no guarantees. The resource allocation required by our team of quantity and/or land surveyors is immense and as such we require the individual claimant’s lawyer and accountancy representative to be suitably instructed and informative. This ensures that we are able to identify and claim the full extent of rebate entitlement. We will not charge for the initial consultation and you will only pay us from monies you receive. Survey fees may be applicable in certain cases however this will not be required until your accountant is satisfied on the rebate amount identified and agreed on report.
Ok, what do I need to do next to put in a claim? It’s possible to do it yourself, but as it’s a technical area and dealing with the taxman isn’t simple at the best of times, I’d recommend you work with a company like ours specialising in this kind of thing. We have a team of award winning customer service people who can talk you through the process. You should only need to provide basic purchase details, complete a simple instruction document and we will also liaise with your accountant and lawyer if you wish. You have absolutely nothing to lose but potentially plenty to gain!
Stephen Long (Partner). For and on behalf of Capital Allowance Rebate.com Our surveyor team have successfully reclaimed allowances for some of the biggest UK conglomerates. We are actively working now on behalf of major commercial entities as well as individual property owners.
To find out if you are entitled to a capital allownce rebate you can enquire here.