Capital Allowances Won’t Chase You!

When it comes to managing your tax liabilities as a commercial property investor, owner or user, if you pay tax capital, allowances are one of the most powerful tools at your disposal. Yet far too many businesses either don’t claim them at all, or assume their accountant has handled it when maybe they haven’t.

So, let’s break down exactly how to claim capital allowances, and the Key? – You must actively claim them — and you must include them in your tax return. For HMRC guidance on claiming they also have a guide.

So, What Are Capital Allowances?

If you’ve purchased, built, or refurbished commercial property, you’ve likely invested in fixtures and fittings – the essential elements that make the building usable: lighting, heating, air conditioning, security systems, and more.

Capital allowances let you deduct the cost of qualifying items from your taxable profits. That means less tax to pay, and more money staying in your business.

But – and this is important – you don’t get them automatically. You must claim them in your tax return.

And How Do You Claim Capital Allowances?

Claiming capital allowances is not a tick-box exercise. It’s a process that requires expertise, accurate valuations, and a clear understanding of what HMRC will accept. Here’s how it works:

1. Identify Eligible Expenditure

This is the foundation of any capital allowances claim. Depending on whether you’ve purchased a property or built/refurbished one, the way you identify qualifying expenditure is very different

• A) When You Purchase a Property

When you buy a commercial building, the sale price covers the land, the structure, and the fixtures inside — but it’s not broken down into those parts on paper.

You can’t claim allowances on land — but you can claim on the embedded fixtures and fittings (like lighting, heating, electrical systems, and more).

To claim:

• You must apportion part of the purchase price to these 3 qualifying items.
• That requires a detailed capital allowances survey and valuation methodology that HMRC will accept.
• The age of the property, previous claims, and the contract terms can also affect what’s available.

It’s not just guesswork — it involves forensic-level review of the property and transaction.

💡 Example: You buy an office building for £2 million. A detailed survey reveals £450,000 of that relates to qualifying plant and machinery. That’s £450,000 you can claim against tax — potentially saving six figures.

• B) When You Build or Refurbish a Property

Construction projects are different. Here, the costs are not bundled into a single price — but spread across multiple contractor invoices and cost schedules.

The challenge is that:

• Many construction cost lines are too broad or vague (e.g. “ install services” or “builders work”).
• You need to itemise and extract only the eligible items — and separate them from ineligible ones.
• This usually requires a capital allowances specialist to review the entire bill of costs and specifications line by line.
• You need to identify items that fall under special HMRC categories with specific rules and rates eg integral features (like lifts, heating, or electrical work)

💡 Example: You refurbish a warehouse for £750,000. On the surface, only £100,000 seems eligible — but a detailed review identifies items that could add £180,000 in qualifying items buried in contractor descriptions. That extra diligence unlocks tens of thousands in tax relief.

2. Commission a Capital Allowances Report

This is where a specialist, like Cavetta comes in. We’ll carry out a specialist capital allowances survey to identify all eligible fixtures, apportions costs correctly, and prepares a compliant report HMRC will accept.

Once the qualifying expenditure is identified, we compile it into a robust report. This includes:

• A breakdown of eligible items
• Apportionment methods and valuations
• Photographic evidence (if needed)
• References to HMRC guidance and relevant case law

This report is what your accountant uses to enter the figures into your tax return. It’s also what protects you if HMRC ever raises questions about the claim.

🛑 Without this step, your claim is at risk — or may not happen at all.

3. Submit the Claim Through Your Tax Return

Here’s the crucial part:

The capital allowances must be included in your tax return  – the figures must be entered into the correct section of your tax return (Corporation Tax Return for companies or Self Assessment for individuals/LLPs).

If they’re not included in your return, you haven’t claimed them – simple as that.

Unless it’s clearly shown in the tax computation and capital allowances section of the return, it’s not there.

What If You’ve Already Filed a Return?

If you’ve already submitted a return and didn’t include capital allowances, you might still be able to amend it — but there are strict time limits. The sooner you act, the better your chances of recovering missed relief.

Let’s Unlock Your Hidden Tax Relief

Many commercial property owners are sitting on tens or hundreds of thousands in unclaimed allowances — simply because they didn’t realise what was available, or how to claim it properly.

At Cavetta Consulting, we:

• Identify all qualifying expenditure (even in complex or historic projects)
• Prepare compliant, detailed reports HMRC will accept
• Work with your accountant to ensure it’s claimed correctly

✅ Over £50 million in tax savings secured for clients
✅ Over £200 million in allowances identified
✅ Straight-talking, expert advice you can rely on

Our team handles the entire process – from surveying to reporting to working with your accountant – to make sure your claim is not only maximised but submitted correctly in your return.

Capital allowances won’t chase you – you have to claim them.

And they don’t count unless they’re in your return.

Let’s make sure you’re not missing out.

Disclaimer: This is a simplified explanation for informational purposes only and shouldn’t be considered professional tax advice. Tax rules can be complex, so it’s always best to speak to an accountant or tax advisor for advice specific to your situation.