If you are a landlord, property developer, or building contractor who operates as a sole trader business, you could be missing out on vital funds by not claiming capital allowances.
Rising construction and refurbishment costs mean that ignoring money to which you are entitled is no longer an option.
From solar arrays to structural renovations, you can leverage allowances on core parts of your work to reinvest into new projects and boost your working capital.
What can I claim?
Strong demand for energy-efficient upgrades has led to a major investment in construction, and capital allowances can push that further.
However, too many sole traders are unaware of their eligibility for capital allowances, resulting in them paying more tax than they need to.
These capital allowances can drive investment and innovation by reducing your tax bill and increasing your commercial viability.
Through schemes like the Annual Investment Allowance (AIA), Writing Down Allowances (WDA), and the Structures and Buildings Allowance (SBA), you can offset qualifying costs against their taxable profits.
You can deduct up to £1 million annually from your taxable profits using the AIA, while WDAs will enable you to claim tax relief on a percentage of anything in excess of this each year.
The SBA allows for a flat three per cent deduction annually over 33 years and is applicable to construction and renovation costs of non-residential buildings.
Even projects that you completed in prior years may be eligible for capital allowances.
Green investment
You can also take advantage of capital allowances to support investment in green technology.
The World Green Building Council has set a challenge for all new buildings to be net-zero in operation by 2030 and is looking to reduce embodied carbon by 40 per cent or more – with all buildings meeting The Intergovernmental Panel on Climate Change (IPCC) net-zero target by 2050.
With the Government continuing to incentivise energy-efficient improvements, several forms of capital allowances now allow businesses to significantly reduce their tax liabilities when investing in eco-friendly assets and infrastructure.
This means there has never been a better time to invest in greener properties for financial reasons.
Capital allowances can dramatically reduce your tax bill and make eco investments commercially viable.
What should I do?
As economic pressure mounts, it is important to utilise all the funds to which you are entitled.
HM Revenue and Customs (HMRC) are increasing scrutiny in most areas of business regulation, so being able to verify any claim is essential.
Increase the veracity of your record-keeping processes. This will better enable you to track the capital allowances you are entitled to and ensure that you do not miss out on vital funds.
By seeking professional advice, you can come to a greater understanding of capital allowances. This can inform the planning of your future work so that you can optimise your investments and commit more to projects that are likely to yield greater relief.
At Grunberg & Co, we can help you claim capital allowances as part of a larger tax strategy, ensuring you are making the most of available reliefs and mitigating your liabilities.
Optimise your tax position with Grunberg & Co – contact our specialists today.
