In this article, Counting King explores the process and benefits of claiming embedded capital allowances in the UK
Embedded capital allowances refer to tax deductions that can be claimed by a purchaser of a property or business for assets that are already in place within the property or business at the time of purchase.
These assets are deemed to be “embedded” within the property or business, therefore, their value is already included in the purchase price.
The benefits of embedded capital allowances
- Reduced taxable income or profits
- Increased cash flow for property owners
- Encourages investment in commercial properties
- Stimulates economic growth and development
- Promotes modernisation of infrastructure
- Supports job creation in the construction and real estate sectors
- Incentivises eco-friendly property enhancement.
How to determine eligibility for embedded capital allowance
To claim embedded capital allowance, your property must meet specific criteria.
This should involve identifying hidden assets within commercial buildings that qualify for tax relief.
To qualify, you must have:
- Ownership of a commercial property in the UK
- Inclusion of qualifying fixtures or integral features within the property
- Property used for a trade, business or rental activity
- Property is not a dwelling or residential property
- Proper identification and valuation of qualifying assets
- Timely submission of claims within the allowable period
- Compliance with tax regulations and documentation requirements.
Gathering documentation
Counting King will compile detailed documentation of your Embedded Capital Allowances activities.
This may include:
- Identification of qualifying assets
- Technical evaluations
- Evidence of hidden costs
- Records of relevant expenditures.
Accurate documentation is essential for a successful claim.
Calculating the value of your embedded capital allowances
The calculation considers the eligible costs related to embedded fixtures and integral features, such as:
- Construction expenditures
- Professional fees
- Installation expenses.
By working with Counting King, you can ensure an accurate calculation and maximise your claim.
Once the necessary information has been gathered, Counting King will use their specialist tax software to amend or submit your claim to HM Revenue and Customs (HMRC).
After you have submitted your claim, HMRC will review the details provided and may seek further information or clarification.
Once approved, you will receive your allowances or rebates, which will help to enhance the financial efficiency of your business.
Increased cash flow and ROI with Counting King
UK-based ABC Manufacturing purchased a commercial property to expand its production facility. The property required significant upgrades, including a new energy-efficient HVAC system, modern electrical wiring and fire safety installations.
ABC Manufacturing engaged Counting King to identify and value the qualifying embedded fixtures and features for capital allowance claims.
By successfully claiming embedded capital allowances, the company reduced its taxable income, resulting in substantial tax savings, increased cash flow, and a faster ROI.
Embedded capital allowances can be complex
Work with Counting King to ensure compliance and optimise your claim.
Start exploring these allowances today and enhance the financial effectiveness of your UK-based business.
Watch the full video below:
Download the brochure for more information here.
