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Capital allowances FAQs

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My accountant already deals with our capital allowances. Isn’t this something they should have done already?

Only large accountancy firms with in-house construction experts (and big fees!) can offer complete and up-to-date advice on capital allowances. We will almost certainly be able to identify opportunities to increase and accelerate tax savings, and we won’t charge you anything if we can’t.
It’s important to note that we won’t undermine your accountant – we’ll work in collaboration with them to increase your savings.

Might this cause problems with HMRC?

No. Claiming can result in a cash rebate from HMRC, or a reduction in current and future tax bills, or both.
Capital allowances aren’t a tax-avoidance scheme – this is only about good tax housekeeping, making the most of government-backed tax relief.

Will this affect my capital gains tax or reduce the value of my property?

No. Capital allowances are a right, not a privilege. They are not taken into account when property is valued for commercial or accounting purposes.
The tax legislation and published HMRC guidance make it very clear that capital allowances will not increase a capital gain.

This sounds too good to be true. There must be hidden costs?

Can I make an historic claim?

Yes. If you still own the asset, you can start claiming in the first year of your accounts that are open.

Can I claim on my property held in a pension fund?

No. Because the pension fund does not pay tax, you can’t claim tax relief.

Do I need to consider capital gains tax (CGT) alongside my capital allowances claim?

Claiming capital allowances on your fixed plant and machinery will not reduce your CGT base cost if you sell your property for a profit. It is more complicated if you sell at a loss, and you are advised to discuss your CGT position with an accountant.

Is there a time limit for claiming the allowances?

Yes. Various time limits exist, depending on when you incurred the expenditure, but this does not always mean allowances are lost. We’ll secure the maximum relief available to you.

Will I need to provide all invoices?

No. Where invoices aren’t available, our process will generate the details needed to show proof of expenditure.

How do I make a claim?

We will analyse the actual cost information and prepare a report, detailing what costs you are claiming allowances on. You then claim the allowances via your tax return.

I am selling an investment property. Will I suffer a tax claw-back on sale?

No. You will be able to keep all the allowances, even after you have disposed of the property.

Can landlords claim on a tenant’s fit-out costs?

Yes, if they have made a capital contribution to the tenant’s fit-out works, for example carpets and floor boxes.

Can I claim allowances on my residential block?

Only on communal areas. You can’t claim allowances on a residential dwelling, which means anything beyond the front door.

I am a developer. Can I claim allowances on the properties I build?

Can I claim allowances on VAT paid?

If I buy a property, am I entitled to the capital allowances?


Click on the questions below to reveal the answers

Can charities and sole traders claim R&D tax credits?

No. Charities, universities, sole traders/partnerships are unable to claim under the R&D tax credits scheme.
The entity claiming must be a corporate body, liable to UK corporation tax. This would therefore include UK branches of overseas companies.

I am newly incorporated. Can I claim R&D tax credits?

As long as the company has commenced trading and is a going concern, it can claim R&D tax credits. In fact, a number of our clients are in the early stages of trading and do claim the R&D tax credit relief.

I was developing a product/service that met the R&D criteria but it failed. Can I still claim R&D tax credit?

Yes. The overall success of a project is irrelevant in terms of making a claim.
If anything, a failure may be good in terms of showing the complexities of the R&D project.

I was developing a product/service that met the R&D criteria but it was not finished before the end of my accounting period. Can I still claim the R&D tax credit relief?

Yes. As long as the project was ongoing during the claimable period and qualifying R&D activities were undertaken, then a claim can be made.
In fact, a claim may be made in the subsequent period if the project was still ongoing at that point.

I was developing a product/service that met the R&D criteria. It was started before the claimable period but continued into the claimable period. Can I still claim R&D tax credit?

Yes. As long as the project was ongoing during the claimable period and qualifying R&D activities were undertaken, a claim can be made.

My company is in a loss-making position before any extra deduction – can I still claim? If so, how, and is it worth it?

Yes. In fact, many loss making companies receive repayments from R&D, which can be a lifeline to them when cash flow is tight. The claim is made by amending the tax return. Losses can be exchanged for a repayment at 14.5%, so can be very valuable to the company.
The amount that can be surrendered is restricted to the loss relating to the R&D projects, rather than the loss from general trading.

My company is UK-based but the R&D activities took place overseas. Can I still claim for these activities?

It doesn’t matter where the R&D activities were undertaken – as long as they are qualifying activities, an R&D tax credit claim can be made.

What exactly is a ‘technological uncertainty’?

A technological uncertainty is where your company is researching or developing something that is not known to be scientifically or technology feasible when you make or discover it.
This means that your company, or experts in the field, cannot already know about the advance or the way you achieved it. This includes an idea of how the uncertainty may be resolved but you have to go through a process of trial and experimentation to test the idea and prove whether or not the idea is feasible.

Which projects of mine qualify for R&D tax credits?

The projects have to be assessed individually to see if they qualify. They must involve the development of a new or appreciably improved product or process and show an element of technological uncertainty.

Patent Box FAQs

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Can I make a Patent Box claim as well as an R&D claim?

The Patent Box regime is designed to work in conjunction with R&D claims, so you may be able to claim R&D relief based on expenditure incurred and Patent Box relief based on income derived from IP.

I own several patents. What can I claim for?

If your company makes one product, then you only need to have one component of that product with an IP right in order to make a claim. Having additional IP rights will not impact the level of relief.

If your company has income relating to more than one product, then as long as there is a qualifying IP right, as described above, then the income relating to each relevant product can be included in the claim.

Isn’t it complicated, time-consuming and/or expensive to make a claim?

The legislation is complex, but that is where we will help, by making the process quick and easy for you. We’ll work with you and your accountants to gather the relevant information, then chartered tax advisors will prepare the calculations on your behalf.

Because we work on a fixed percentage of the tax benefit arising, if you don’t receive any benefit, it won’t cost you a penny.

What income qualifies for relief?

There are five types of income that can qualify for relief:

  1. Sales of items that are either patented or incorporate components with IP rights
  2. Licence and royalty income
  3. Sales of IP rights
  4. Damages received by the company in respect of an infringement, or alleged infringement, of IP rights
  5. Damages, insurance or compensation received by the company in respect of a loss of relevant income

Is Patent Box only for UK patents?

Fortunately, the Patent Box regime covers more than only patents registered in the UK. It includes the following IP categories:

  • A patent granted by the UK Intellectual Property Office
  • A patent granted by the European Patent Office
  • A patent granted under the law of a specified European Economic Area state

No win, no fee

We operate on a ‘no win, no fee’ basis. We’ll only need basic information about your business, then we’ll do all the background work. Simply get in touch to arrange our first call, then we’ll do the rest.