According to new research, commercial property owners across the UK have lost out on £100 million of tax relief between April and July of this year as a result of a change to taxation law.
Changes to tax regulations that came in at the beginning of April this year saw a limit put in place relating to how soon the new owners of a commercial property could claim tax allowances for any spending they had done on plant, machinery and equipment. The change was made by HM Revenue & Customs in a bid to prevent property owners making fraudulent tax relief claims.
The vast majority – up to 85 per cent – of the fit out costs of a building can be eligible for the tax allowances and these costs can include lighting, lifts and air-conditioning.
Unlike the old regime, where there was no time limit on making a claim for allowances, under the new regulations, owners must claim the tax allowances within two years of buying the property.
The relevant capital allowances had been claimed across just 1 per cent of the 3,000 commercial property sales in the UK between April and June 2014, tax advisers Catax Solutions said. This means that around £100 million of capital allowances have been lost.
Catax managing director, Mark Tighe, told the Financial Times: “We have watched in frustration as Britain’s commercial property owners throw away an absurd amount of money in tax relief month after month due to a lack of understanding and knowledge of capital allowances.”
Mr Tighe went on to say that the details of the regulation change were so complicated that many people were still “struggling to get their heads around capital allowances and the changes introduced.”