Capital allowances can reduce taxable profits by giving tax relief on qualifying capital expenditure. For many businesses, this can mean a lower tax bill and improved cash flow. However, the rules are complicated, the categories of relief vary and valuable claims are often missed.
Stratos helps companies, sole traders, partnerships, property owners and advisers identify, calculate and claim in full the capital allowances available to them on qualifying expenditure.
What are capital allowances?
Capital allowances are a form of tax relief for expenditure on certain fixed assets used in a business. Instead of deducting accounting depreciation which is often disallowable for tax purposes, businesses claim tax relief under the capital allowances rules.
The relief available depends on the type of asset, the business structure, the timing of the expenditure and the allowance being claimed.
Why a capital allowances review is worthwhile
Many businesses claim basic allowances through their accounts, but not all claims are straightforward. Commercial property transactions, refurbishment projects, fit-outs, construction costs and large capital purchases can contain items that are easy to miss or misclassify.
Common areas where we help clients claim additional tax relief are often in relation to:
- Unclaimed qualifying expenditure.
- Assets that should be pooled differently.
- Annual Investment Allowance opportunities.
- Full expensing or first-year allowance opportunities.
- Structures and Buildings Allowance claims.
- Section 198 election points on commercial property transactions.
- Historic claims that may need to be amended or improved.
Commercial property and section 198 elections
Capital allowances are especially important when commercial property is bought or sold. Fixtures within a building may qualify for allowances, but the buyer and seller need to agree how those allowances are treated. A section 198 election is commonly used to fix the value of fixtures transferred as part of a sale.
How can Stratos help you?
Stratos can review capital expenditure, identify qualifying assets, calculate available allowances, advise on Annual Investment Allowance, full expensing, first-year allowances and writing down allowances, and prepare allowance schedules for your accountant or tax return.
We can also support commercial property transactions, including capital allowances due diligence and section 198 elections.
Arrange a capital allowances review
If your business has incurred significant capital expenditure, there may be valuable tax relief available.
Contact Stratos to discuss whether a capital allowances review could help reduce your tax liability and improve your cash-flow position.
Related News
Do you need to register for Self Assessment?
HMRC mileage rates rise to 55p: what you can claim
Case Study
Tax relief on the construction of a new manufacturing site
The Challenge
Our client – a UK‑based manufacturer – was investing roughly £9 million in building a new factory on its existing site. With hundreds of individual construction costs to track, the finance team wasn’t sure which items would qualify for capital‑allowances relief, and they were keen to avoid leaving money on the table (or, worse, making an inaccurate claim).
The Solution
Stratos joined the project team on‑site, working shoulder‑to‑shoulder with the client’s engineers and quantity surveyors. We mapped every line of expenditure against current legislation, relevant case law and HMRC guidance, then prepared a fully‑evidenced allowances schedule and the necessary elections for the company’s tax return.
The Value
The review unlocked substantial seven‑figure capital‑allowances claims, giving the business an immediate corporation‑tax saving and a healthier cash‑flow position for further growth. HMRC accepted the claim in full, confident in the robust, well‑documented approach.
FAQs
Capital allowances let businesses claim tax relief on certain qualifying capital expenditure, such as plant and machinery, instead of deducting accounting depreciation which is disallowable for tax purposes.
The Annual Investment Allowance is a valuable allowance which can give 100% relief on qualifying capital expenditure up to the relevant annual limit of £1 million, subject to meeting the detailed requirements to qualify.
Yes. Claims can apply where a property includes qualifying fixtures, integral features, plant, machinery or qualifying construction expenditure.
Potentially. A review can identify whether qualifying expenditure has been missed, incorrectly classified or not fully evidenced and determine whether allowances can still be claimed.
Looking for a specific service?
Find what you're looking for here
Related Services
Capital Allowances
Business Property Tax
VAT
ATED
HMRC Enquiries & Voluntary Disclosures
Tax Returns
