Identifying and managing your capital allowances

You might qualify for more financial tax breaks than you thought.

11:25 12 December 2013

Capital allowances are tax breaks offered for certain items related to commercial property. They can be a variety of different things from dguard ogs to vehicles. It can be confusing to try and figure out what types of things qualify for capital allowance. In general, you can rule out anything, which isn’t used directly for commercial purposes. The types of assets that are considered are also not the premises themselves.

Here are a few of the things that might be considered for capital allowance depending upon the type of business you have.

• Large tools
• Machinery
• Furnishings
• Furniture related to commercial use
• Electrical goods
• Telecommunications equipment
• Computing equipment
• Safety equipment
• Security equipment
• Vehicles
• Swimming pools
• Storage equipment
• Some software, as long as there is at least two years of working life left

There are a couple of different categories within the capital allowance heading. Integral features which are some of the following items:

• Cars which are not fuel efficient (classified as 160g/km or more CO2 emissions)
• Water supply systems for commercial use
• Commercial power supply systems
• People movers
• Lifts
• Escalators

For the first section of assets the claiming allowance is 20%, or 18% from the tax year beginning in April 2012. This essentially means that each year you would be able to claim 20% or 18% of the quantified value or of the previous year’s value. For the integral features the writing down amount is slightly lower, between 10% and 8% from the tax year beginning in April 2012. You are able to combine the writing down amounts to ensure that you receive the best benefit.

Capital allowance is a way to offer you a legitimate tax break. If you did not realise that you could have claimed capital allowance in the past you can have a surveyor review everything and quantify claims.