Unclaimed Capital Allowances - Time is running out!

If you are a building owner who hasn’t made a capital allowances claim, you could be missing out on a substantial opportunity.  Restaurants, hotels, offices, warehouses, factories, and retail outlets are all types of businesses that could make a capital allowances application.

Capital allowances are a tax relief designed to allow the cost of some of your or an organisation's assets to be written off against its taxable profits. They take the place of the depreciation shown in the financial (commercial) accounts, which isn't allowable for tax purposes.


There are different types of capital allowances. For each allowance there are special rules to calculate how much, if any, relief you can claim. You have to follow these rules, rather than the method used in your accounts for calculating depreciation.


Many companies and individuals fail to claim these allowances. There are all sorts of reasons for this, ranging from non-UK taxpaying ownership and pension fund interests (who don’t pay tax) right through, in some cases, to plain lack of knowledge. But the point is that a UK taxpaying company or individual can re-claim these allowances even if it is a subsequent successive owner, provided no previous claim has been made.


Discovering unclaimed tax allowances is a little like finding yourself as an unexpected beneficiary of a distant relative’s will.  There is a substantial body of professionals out there (including Vinden) who have specialists trained in detecting and securing unclaimed capital allowances. Many millions of unclaimed tax allowances on buildings and land going back through the past are secured every year. That’s the good news. The bad news is that things may be about to change.


The Government has announced that it will be consulting on plans to introduce a time limit for retrospectively claiming allowances. A consultation document is expected to be published by the end of June 2011. We don’t know for certain what will be in the consultation document but in these austere times you can be sure that it won’t make happy reading! Our best guess is that limits, financial and time, will be imposed on retrospective claims.


The incentive for owners of commercial property to push forward retrospective capital allowance claims has never been greater. Unless you really want to lose out, commercial property owners should think about bringing forward any retrospective reviews of historic capital expenditure now, before any limits are introduced.

Peter Vinden

Peter is an experienced professional in the construction industry with particular expertise in quantity surveying and the commercial management of contracting organisations.