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As a developer, you are excluded from claiming capital allowances where you hold the property as trading stock within your profit and loss account. However, if you incur capital expenditure on a property, which you occupy or hold as an investment, then you can claim capital allowances for that property.
That said, you can still gain benefits from the capital allowances regime or regeneration incentives, where you hold the asset as trading stock in the following instances:
- if you are a UK tax paying company with a qualifying relevant interest in the land you are remediating, you may be able to benefit from 150% land remediation and derelict land relief
- to enhance the saleability of your property; where there is new and unused plant which contains qualifying energy and water saving technologies, the purchaser may get the benefit of 100% Enhanced Capital Allowances in the year of acquisition
Where a property is held by you for occupation or investment, and you are subject to either UK income or corporation tax, you are able to claim property tax relief in the following circumstances:
- the acquisition of the property
- the refurbishment or redevelopment of the property
- the fitting out of the property
- contributions towards your tenant’s fit out costs
Considering capital allowances at an early stage of a transaction, development or lease incentive will allow you to maximise your capital allowances position and manage your exit strategy. Claiming capital allowances is a statutory right. The benefits of claiming this relief are that it will improve the cash flow of your business, lower risk for those supplying loans to the business and may be used as a means to preserve and enhance the value of your asset.