Construction projects ― building capital allowances considerations

Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax, part of AMS Group

Owner-Managed Businesses

Guidance

Capital allowances are available on construction work on commercial property where the completed building will be classified as a tangible fixed asset in the financial statements of the business, such as:

•
constructing buildings for use in the business
•
refurbishing / fitting out an existing property for use in the business

The ‘business’ for this purpose may be that of an individual, partnership, company or corporate group; for use in such business, or letting to a third party if letting is all or part of the business of a property investment company. Certain types of allowances are only available to companies.

Most types of capital allowances will not be available to developers holding the property as trading stock, but see the table of allowances below for exceptions.

The main capital allowances available will be for plant and machinery (P&M) ‘fixtures’ and for construction expenditure on non-P&M structures and buildings incurred on or after 29 October 2018.

‘Fixtures’ in this sense,

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Rob Durrant-Walker

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax

Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

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Construction projects ― building capital allowances considerations