Recent changes to capital allowances in 2026 are now in force, and whilst much of the discussion has focused on businesses purchasing new equipment and machinery, there is another area that commercial property owners and accountants should not overlook.
Historic qualifying expenditure within commercial property.
From April 2026, the main Writing Down Allowance rate reduced from 18% to 14%, with changes also applying to special rate expenditure. Whilst many businesses may still benefit from Annual Investment Allowance (AIA) or First Year Allowances, the recent changes serve as a reminder of the importance of identifying qualifying expenditure correctly and at the right time.
For commercial property owners, this can be particularly significant!
Capital Allowances Within Commercial Property
Many commercial properties contain substantial qualifying plant and machinery embedded within the building itself. These are often referred to as “embedded fixtures”.
Examples can include:
- Electrical systems
- Lighting
- Heating and air conditioning
- Cold water systems
- Fire alarm systems
- Security systems
- Sanitaryware
- Specialist installations
- Kitchen and hospitality equipment
In many cases, these assets are not separately identified during a property acquisition, meaning potential tax relief can be overlooked entirely.
Why the Recent Changes Matter
The recent reduction in Writing Down Allowance rates means businesses receiving relief over time may now recover tax relief more slowly than under previous rules.
As a result, identifying qualifying expenditure accurately becomes increasingly important.
This is particularly relevant where:
- A commercial property was acquired historically
- A refurbishment or fit out has taken place
- Previous ownership changes occurred without a detailed capital allowances review
- Embedded fixtures were never properly assessed
We regularly encounter situations where commercial property owners are unaware that qualifying expenditure may still exist within their property portfolio.
Common Property Types Where Allowances Are Missed
Capital allowances opportunities can arise across a wide range of commercial properties, including:
- Hotels
- Offices
- Industrial units
- Warehouses
- Care homes
- Restaurants and pubs
- Retail units
- Furnished holiday lets
- Mixed use commercial property
In some sectors, particularly hospitality and care, the level of qualifying expenditure can be substantial due to the nature of the building services and specialist installations involved.
Common Misconceptions
One of the most common assumptions we hear is:
“Our accountant already dealt with this.”
Whilst accountants play a vital role in tax compliance and advisory work, identifying embedded fixtures within commercial property often requires a specialist review involving survey based analysis and detailed apportionment work.
Other common misconceptions include:
- “The property is too old”
- “The previous owner probably claimed everything”
- “We only carried out refurbishment work”
- “Capital allowances only apply to loose equipment”
In reality, each case depends on the property history, the transaction structure, historic claims position and the nature of the expenditure incurred.
Why Timing Matters
Capital allowances legislation surrounding commercial property has become increasingly complex over recent years, particularly in relation to fixtures and property transactions.
Leaving matters until a future sale or refinance can sometimes limit available options, especially where historic documentation becomes more difficult to obtain over time.
Reviewing qualifying expenditure earlier allows businesses and their advisers to understand the position properly and ensure opportunities are not missed.
How CA Select Can Help
At CA Select , we specialise exclusively in capital allowances relating to commercial property.
We work alongside accountants, solicitors, investors and commercial property owners across the UK to identify qualifying expenditure within acquisitions, refurbishments and existing property portfolios.
Our approach includes:
- Detailed property reviews
- Survey led analysis
- Embedded fixtures assessments
- Collaboration with accountants and tax advisers
- Comprehensive reporting to support claims
Whether you have recently acquired a commercial property, completed refurbishment works, or simply want to understand whether historic qualifying expenditure may exist within your portfolio, we would be happy to discuss the position further.
To learn more about our services, contact us.
