Capital Allowances in Office buildings

Do you own a commercial property in the UK?

Capital Allowances in Industrial Units / Factories

Are you a UK Tax payer?

Gym / Leisure building

If so, you may be eligible to claim
Capital Allowances

Bed and Breakfast / Hotel Capital Allowances

Tax relief of over 25% of the property’s original purchase and refurbishment price is frequently available.

Corporate Office Capital Allowances

We take the hassle out of your Capital Allowances Survey

Capital Allowances available on hotels

If you are a commercial property owner, and a UK tax payer, please get in touch!

Freeport Sites and Investment Zones

It was recently announced that two new Freeports would be established in Wales –Celtic Freeport covering Milford Haven and Port Talbot and Anglesey Freeport in North Wales – with the potential for an Investment Zone worth up to £160m in North East Wales. Consequently,  we decided to put together this article to highlight some benefits for a company situated or thinking of moving to one of these sites and zones.

According to UK government, eligible businesses in Freeports and Investment Zones will enjoy a range of tax incentives, such as:

  • Enhanced Capital Allowances (’ECA’s’)
  • Enhanced Structures and Building Allowance (‘SBA’)
  • Full Business Rates Relief
  • Employer National Insurance Contributions for additional employees and
  • Relief on SDLT or equivalent

For the purposes of this article, we want to focus on ECA’s and SBA’s and what this means for businesses but we will briefly touch on the other main benefits at the end.

What are ECA’s?

ECA’s (or First Year Allowance) is a 100% allowance for UK companies that can be claimed for certain types of assets which must be new and unused. ECA’s are available alongside the Annual Investment Allowance (‘AIA’) which already gives 100% relief for up to £1m per annum for costs of qualifying plant and machinery in the year of purchase. Both ECAs and AIA can be claimed by a taxpayer.

What do we mean ‘certain types of assets’?

The following items normally qualify for ECA’s:

  • Electric cars and cars with zero CO2 emissions
  • Plant and machinery for gas refuelling stations e.g. storage tanks and pumps
  • Gas, biogas and hydrogen refuelling equipment
  • Zero-emission goods vehicles
  • Equipment for electric vehicle charging points

What is the main benefit of ECA’s for a business in a Freeport/Investment Zone?

In short, you can claim 100% for new plant and machinery, including integral features and long-life assets which would normally only qualify for the 50% special rate allowance on the asset cost in the year of purchase.

NB          Primary use of plant and machinery must continue to be for a Freeport site for 5 years


Section 33A Capital Allowances Act 2001 defines integral features as:

  • An electrical system, including a lighting system
  • A cold-water system
  • A space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system
  • A lift, escalator or moving walkway
  • External solar shading

Any claim will be based on the purchase, refurbishment or construction cost of the premises.

We would estimate expenditure qualifying for Capital Allowances within an industrial building would normally amount to 15%–20% of the cost. If the expenditure related to a refurbishment, we would expect 50%-75% of the cost to qualify for Capital Allowances.

Use the calculator on our website www.caselect.co.uk to see how much potential tax saving you could receive by submitting a claim.

SBA

An SBA is available for qualifying expenditure incurred on the construction of new, and/or enhancement of existing commercial buildings and structures. This relief may be available to any business that is a UK taxpayer.

NB          An SBA is not available for expenditure incurred on residential buildings


Relief is available at 3% per annum over 33⅓  years on the straight-line basis.

What qualifies for SBA?

Qualifying expenditure can include amounts incurred on structures and buildings, as well as incidental expenditure such as demolition works and/or land alterations. No relief is available in respect of expenditure incurred on the land itself other than the alteration/preparation of the land for the installation of a building or structure.

Qualifying expenditures does not include expenditure that would qualify for ECA’s. Therefore, to benefit from an SBA, a business must first undertake a capital allowances exercise, which usually requires a site visit by a CA specialist. Businesses can continue to claim ECA’s in respect of qualifying expenditure incurred on the provision of new plant and machinery, at the higher rates of annual relief.

What does this mean for Enhanced SBA?

Where the contract is in a Freeport site, UK tax paying businesses constructing a new commercial building or refurbishing an existing one, receive an enhanced SBA of 10% per annum over 10 years on the straight-line basis, as long as the contract was entered into after 29 October 2018.

If a building or structure is partly situated in a Freeport site, the expenditure must be apportioned on a ‘just and reasonable basis’ to determine the enhanced SBA. The relief can only be claimed for expenditure incurred from the date a Freeport and Investment Zone tax site has been designated.

Capital Allowances can be complicated. As part of your tax planning, our advice is to speak to a qualified professional who will assess your qualifying expenditure. For more information or for a no obligation discussion on your individual circumstances, please contact us at CA Select, details below.

Other tax incentives include

National Insurance Contributions

Businesses with a business premises inside a zone/site need to pay Secondary Class 1 National Insurance contributions if your employee earns more than the Freeport Upper Secondary Threshold of:

  • £25,000 per year
  • £2,083 per month
  • £481 per week

This means that if an employee earns less than this, then no Secondary Class 1 National Insurance contributions are due (correct as of December 2023).

To claim the relief, all employees must:

  • spend at least 60% of their working time in the Freeport tax site
  • have started their employment between 6 April 2022 and 6 April 2026
  • be within the first 36 months of their employment
  • not have been employed by you or a connected employer in the previous 24 months

https://www.gov.uk/guidance/check-if-you-can-claim-national-insurance-relief-in-freeport-tax-sites

SDLT or equivalent

England – you may be able to claim relief from SDLT if you are buying land or buildings in a Freeport tax site in England

E.g. locating within a Freeport would save buyers purchasing non-residential land and buildings SDLT of 2% on the cost from £150,000 to £250,000 and 5% on the remaining cost from £250,001.

Scotland ― the Scottish Government plan to offer Land and Building Transaction Tax relief, subject to legislation agreement

Wales ― the Welsh Government plan to offer Land Transaction Tax relief, subject to legislation agreement

https://www.gov.uk/guidance/check-if-you-can-claim-relief-from-stamp-duty-land-tax-in-freeport-tax-sites

Business Rates Relief

In Freeports there is full, 100% relief from business rates (or non-domestic rates in Scotland and Wales) on qualifying new properties and partial relief for expanded properties in Freeport tax sites. This relief applies for 5 years from the point at which you receive it.

Businesses in designated areas in sites and zones will benefit from 100% business rates relief on newly occupied and expanded premises. Local authorities hosting zones and sites will receive 100% of the business rates growth above an agreed baseline in designated sites for 25 years.

https://www.gov.uk/guidance/freeports


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