Whilst most business owners recognise that capital allowances offer tax relief on plant and machinery, it's less commonly known that 'Plant and Machinery' lacks a statutory definition.

Rather than being defined in legislation, this term derives its meaning from case law, where 'plant' is understood as "apparatus utilised by a business to conduct its operations" and 'machinery' refers to "equipment containing working parts."

This legal ambiguity often creates confusion about eligible items, potentially leaving significant tax relief unclaimed within your commercial property.

We’ve compiled this straightforward guide to explain why many claims are undervalued and to showcase qualifying items, ensuring you maximise available tax benefits.

What exactly are capital allowances?

To simplify matters, capital allowances potentially apply to any item or system that serves a functional purpose in your trade activities.

The 'Movable Assets' Explanation

The most recognisable qualifying items are what we term 'movable' assets. These include plant and machinery that can be transferred between buildings without causing property damage. Think office chairs, computer equipment, and similar furnishings. Indeed, that ergonomic chair you're sitting on might represent unclaimed tax relief!

Since these items are visible and typically accompanied by invoices or documentation, they're rarely overlooked in claims. The real culprits of missed allowances are the embedded fixtures and fittings – the 'immovable' elements.

Understanding 'Immovable' Assets: Integral Features and Fixed Items

'Immovable' refers to components that cannot be easily relocated and often form part of the building's infrastructure. This category encompasses integral features and fixed installations. Being less conspicuous and frequently lacking readily available documentation, these items commonly go unconsidered, resulting in missed tax savings.

Consider a typical workplace environment: heating systems, water installations, electrical networks, and lifts or escalators. Certain structural modifications to the building might also qualify. Many mistakenly regard these as mere building components, but they actually present considerable tax-saving opportunities.

Capital Allowances Exclusions: What Doesn't Qualify

Having covered qualifying items, it's essential to highlight what falls outside capital allowances eligibility:

• Land acquisition
• Decorative elements
• Components classified as buildings or structures
• Personal possessions
• Leased assets not owned outright
• Items previously claimed against or receiving alternative tax relief

Nevertheless, capital allowances can be nuanced, so consider these exceptions:

Land: While land itself isn't claimable, expenses for contaminated land remediation might qualify. Modifications to land for installing plant and machinery could also be eligible.

Décor: Certain decorative features like wall murals may qualify in hospitality businesses where they enhance customer experience.

Building components: In some instances, walls (such as moveable partitions) and specific elements (like ironmongery or thermal insulation) might be claimable.

Retrospective Claims: It's Not Too Late

You generally have a two-year window from the end of the accounting period in which expenditure occurred to optimise your capital allowance claim. We strongly advise acting promptly to maximise your tax relief benefits.

Professional Assessment: The Value of Expert Input

The danger with capital allowances is presuming everything has already been claimed, typically because only visible items with supporting invoices have been considered. Our approach delves deeper, conducting comprehensive capital allowance surveys to thoroughly examine properties, leaving no potential claim unexplored!

Our assessment includes:

• A detailed inventory of all assets (both movable and immovable where applicable) – this crucial stage establishes a robust foundation for your claim.
• Individual asset valuation, including purchase and installation costs at the relevant location and acquisition date.
• Thorough evaluation of surveyed items and valuations to determine capital allowances eligibility, excluding costs that have already received tax relief.
• Consolidation of all available historical records to substantiate claims.

Only after this rigorous process do we present recommendations and a claim that clients can absolutely trust, knowing their tax position has been fully optimised.

Future-Proofing Your Claims: Essential Practices

To ensure you don't miss out on capital allowances going forward, maintain meticulous purchase records, conduct regular asset reviews, and stay informed about tax regulation changes.

Most crucially, consult with specialists who can maximise your claim potential. Remember, qualifying assets might be invisible, installed by previous owners, or simply overlooked in past claims. Don't let potential capital allowances benefits slip through your fingers.

Get in touch with our team to discuss how your business could save on taxes through a capital allowances claim.