Tax Saving Secrets: Capital Allowances Part 2

Expat Property Story

#160
Do you know what Sideways Loss Relief is?
How about the Annual Investment allowance mechanism?
And what do they have to do with Capital Allowances?
Are you familiar with the deadlines for making a Capital Allowances claim and how to find out if they’ve been claimed before without alerting a vendor to the fact that they could make a claim.
This episode covers all of this and lots more including how to use Capital Allowances as a strategic tool for growing your UK property portfolio.
This is the second instalment of a two-part special on Capital Allowances featuring CA expert Arthur Kemp of Exact Capital Allowances.

If you haven't already done so, listen to last week's Episode #159 first.
In this week's episode, we discuss:
- Differentiation of capital allowances from regular tax deductions

- Explanation of what constitutes plant and machinery within a property

- Breakdown of plant and machinery into constituent parts for valuation purposes

- One-time claim for capital allowances on a building, regardless of subsequent changes in ownership

- Identification and examples of new expenditure that qualifies as capital expenditure

- Impact of specific property enhancements, such as creating new bathrooms or extending the kitchen, on capital allowances

-Clarification on the eligibility of different types of property activities for capital allowances, including HMOs, serviced accommodations, and holiday lets

- Emphasis on the need for specialists due to the complexity of valuation and specific knowledge required

- Differences between regular accountants and specialists in capital allowances

- The importance of understanding if the previous property owner has already claimed any capital allowances

- Explanation of the role of CPSE inquiries and section 198 election in commercial property transactions

- Significance of leading questions to identify whether the previous owner has claimed capital allowances in residential properties like HMOs or holiday lets

- Clauses in the sales contract that establishes the seller's agreement with regard to capital allowances value within 2 years and disclosures to HMRC

- Importance of utilizing capital allowances strategically to reduce tax liabilities and reinvest in more properties

- Flexibility of transferring capital allowances to offset tax liabilities for corporation purposes or against PAYE income

- Discussion of the option to use capital allowances to offset tax from other sources of income or roll it forward to future profits

- Negotiation process with the new owner regarding the value and use of the claimed capital allowances

- Recognition of the 2-year deadline for making necessary disclosures and claiming capital allowances, with different rules for residential and trading properties

- Importance of understanding the rules and implications of selling a property with claimed capital allowances

Keywords
capital allowances, UK property investment, HMRC, property assessment services, tax savings, plant and machinery, expats, property owners, Exact Capital Allowances Limited, trading HMO, serviced accommodation, commercial property, tax liabilities, sideways loss relief, income tax, holiday lets, qualifying activities, CPSE inquiries, section 198 election, sales contract, disclosures to HMRC, corporation purposes, PAYE income, specialists in capital allowances, valuation, plant and machinery valuation, capital expenditure, building ownership, property items, previous owner, tax relief