By Sam Bacall, Partner

If you’re a landlord, property developer, or building contractor sole trader, you might be paying more tax than you need to – simply because you aren’t claiming capital allowances.

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.

By claiming these allowances, you’ll be better able to optimise your tax position and mitigate liabilities.

What can I claim?

You can offset qualifying costs against your taxable profits through the following schemes:

• Annual Investment Allowance (AIA) – This enables you to deduct up to £1 million annually from your taxable profits.
• Writing Down Allowances (WDA) – These enable you to claim tax relief on a percentage of anything in excess of the maximum amount of AIA. How much you can claim depends on which “pool” your assets fall into. There are three types of pool: the main pool (a rate of 18 per cent), the special pool (a rate of six per cent), and single asset pools (a rate of 18 per cent or six per cent depending on the item). The qualifying assets for each pool are listed on the Government website.
• Structures and Buildings Allowance (SBA) – With the SBA, you can claim a flat three per cent deduction annually over 33 years. This allowance applies to the construction and renovation costs associated with non-residential buildings.

Capital allowances can drive investment and innovation by reducing your tax bill and increasing your commercial viability.

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.

Strong demand for energy-efficient upgrades has led to a major investment in construction.

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, capital allowances including the AIA, WDA, and SBA 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.

How FFT can help

Claiming the capital allowances you’re entitled to can make a huge difference to your bottom line.

Reducing your tax liability means more money to support your family, reinvest in your business, and save for a comfortable retirement.

So if you’re not already claiming capital allowances, it’s high time you started.

At FFT, our expert tax accountants are here to help you claim the allowances you’re entitled to and retain as much of your hard-earned funds as you can.

For further information about claiming capital allowances, contact us today.