Changes in Capital Allowances and Property

As the law stood before April 2012, it was possible for the purchaser of a commercial building to claim capital allowances in respect of plant, etc. even if the previous owner had not made a claim. Rather surprisingly, such claims, which cover items such as lifts for example, are often not made.

From April 2012, the situation changed. Firstly, it is now necessary to create a record (the ‘pool’) for all the assets on which capital allowances are to be claimed. A new buyer of a property may only claim capital allowances with regard to items which the previous owner has ‘pooled’.

After April 2014, any relevant expenditure can be pooled after an acquisition, but it must be pooled before the relevant tax return is submitted for the period during which the acquisition takes place.

It will therefore be necessary for buyers and sellers to agree a value of qualifying expenditure to be pooled. Qualifying expenditure must be pooled in any event within 24 months of the end of the accounting period during which the sale occurs.

Failure to pool qualifying expenditure will lead to the right to claim capital allowances on it being lost for the owner and any subsequent purchaser of the property.

If you are buying or selling a commercial property, take advice on the capital allowances position.