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Financial Services
We help minimise investors' tax burdens, using tax incentives, allowances and various mitigation techniques.
The Financial Services team, encompassing surveying, legal, tax and accountancy expertise, has so far analysed around £16 billion in property expenditure, pinpointing some £4 billion worth of allowances.
Building Insurance Valuations
Building Insurance valuations are required on every type of property.
Building Insurance Valuations are required on a yearly basis either on an update or full replacement basis.
Full Building Insurance valuations can reduce insurance premiums and the Building Insurance Valuations take into account any changes to the property.B
Building Insurance Valuations can save you money!
Capital Allowances
Capital Allowances are a form of tax relief given for certain types of qualifying expenditure. The allowances are deducted from a company's or individuals taxable profits before the charge to corporation/income tax. In a similar way to the personal allowance that every taxable person receives when calculating their tax liability.
| Net Profits: |
£1,000,000 |
| Less Capital Allowances (Say): |
£250,000 |
| Profits Chargeable to Tax: |
£750,000 |
| Tax Payable @ 30% (1): |
£225.000 |
It is important to realise that capital allowances save tax payers money at their marginal rate of tax. Consequently, in the above example £250,000 worth of capital allowances equates to an actual cash saving of £75,000 (£250,000 @ 30%).
The Main Types of Allowances
There are various types of Capital Allowances available for property expenditure, including:
Plant and Machinery Allowances (P&M), Enhanced Capital Allowances (ECA), 100% Capital Allowances for Flats Over Shops, Industrial Building Allowances (IBA), Hotel Allowances (HA), Enterprise Zone Allowances (EZA) and Research and Development Allowances (RDA).
By far the most common type of Capital Allowance associated with property expenditure is Plant and Machinery Allowances. These are closely followed by Industrial Building Allowances and Hotel Allowances.
Different Allowances, Different Cash Saving
It is important to note that different allowances can provide different cash savings. Indeed, some allowances are given in full in the year the expenditure is incurred (e.g. ECA's, 100% CA's for Flats Over Shops, EZA or RDA). Other allowances are given over a reducing balance basis (for example: P&M at 25% per annum and LLA's at 6% per annum). Whilst others are given on straight-line basis (e.g. IBA or HA at 4% per annum). The result is that different allowances can generate different cash savings, as follows:
|
Written Down Rate |
Initial Expenditure |
NPV Cash Saving* |
Percentage Return |
| ECA, R&D, Enterprise Zone, Flats over shops |
100% |
£1m |
£300k |
30% |
| Plant & Machinery |
25% reducing |
£1m |
£256k |
26% |
| Hotel Allowances |
4% straight |
£1m |
£162k< |
16% |
| Industrial Building Allowances |
4% straight |
£1m |
£162k |
16% |
* Based on discount rate of 6% and corporation tax rate of 30%
The different allowances themselves are also each governed by separate rules within the Capital Allowances Act 2001.
One of the roles of a Capital Allowances Specialist is to ensure that all the available allowances are identified and claimed in the most tax efficient manner. In general, taxpayers should seek to claim relief for expenditure in the following order:
- As a revenue deduction;
- As R&D, ECA, EZA or 100% CA's for flats over shops.
- As an item of plant or machinery;
- As an industrial building or qualifying hotel
Planning is nearly always possible and the amounts involved normally justify at least an initial examination.
Capital Gains Tax - Property Valuations
Opportunity
Under pressure from the RICS and leading property companies, the Inland Revenue have introduced a window of opportunity that allows companies, or groups of companies, to agree 31st March 1982 property values for capital gains tax purposes prior to disposal.
These values are subsequently frozen, but do not have to be used for CGT calculations on sale.
By doing so, the Inland Revenue hope to reduce the uncertainty of company's 31st March 1982 valuations and therefore, facilitate more accurate tax planning for future sales of land and buildings.
Rules
The company or group of companies must have held:
Valuations must be made within two years from 21st March 2000.
The Inland Revenue will accept a representative sample of properties.
Problems
The Red Book basis of valuation in 1982 was materially different to the basis of valuation for taxation purposes.
1982 valuation evidence is difficult to find.
All values put forward for checking will have to be supported by appropriate professional valuations.
Solution
Our company Financial Services provide the necessary professional tax and valuation knowledge and experience to maximise the 1982 values to the advantage of taxpayers.
Capital Goods Scheme (CGS)
The Capital Goods Scheme (CGS) adjusts the VAT implications if the use of an asset changes. If the use of an asset changes, for VAT purposes, from exempt to taxable, there is an increase in recoverable VAT, and from taxable to exempt, there is a decrease in recoverable VAT. Only certain works are included within the Capital Goods Scheme (CGS). By monitoring those works included within the Capital Goods Scheme (CGS), Capital Goods Scheme (CGS) consultants can advise how much irrecoverable VAT against qualifying plant and machinery can be added to the capital allowances claim. A Capital Goods Scheme (CGS) consultant can advise the client of the exact cost of works within a capital allowances claim, covered by the Capital Goods Scheme (CGS). Therefore, the Capital Goods Scheme (CGS) consultant can prevent the client incurring unnecessary and excessive VAT liability or can further maximise a capital allowances claim.
Remediation of Contaminated Land
Enhanced Capital Allowances
Enhanced Capital Allowances were brought in under the Capital Allowance Act 2001 to help reduce carbon emissions. Enhanced Capital Allowances are certified by the Carbon Trust as energy efficient plant. Enhanced Capital Allowances attract accelerated relief at 100% in year 1. Enhanced Capital Allowances are referred to specific technologies within products which are categorised on the Carbon Trust Web Site. Enhanced Capital Allowances expenditure must be on unused and not second hand plant and Enhanced Capital Allowances are not available on long life assets.
Financial Audit & Management
Providing audit services to maximise capital allowances, identified when project expenditure is analysed by in house or external surveyors in accordance with corporate and in house manuals Management services to assist in the development, implementation, and regular update of internal systems to identify all property expenditure, including for tax relief, depreciation policies and asset accounting.
Grants
With an ever-increasing emphasis on the reuse of brown-field sites and the inherent cost risks in the development process, identification of potential Grant availability can often be the determining factor of the feasibility of any project.
Our company offers a comprehensive grant service to the construction industry, designed to guide customers through all stages of the funding maze. An early consultation with one of our specialists can highlight the funding assistance that may be available should a scheme prove financially unfeasible, preventing delays in the development process.
Our specialists can interpret the raw data and provide you with:
- grant search & project eligibility
- development appraisals
- application advice & preparation
- negotiation through to award
- post award administration and monitoring
In addition, whilst our activities are focused on obtaining capital grants towards construction projects, we can also provide information on training allowances, research grants and employment assistance.
Industrial Building Allowances
Industrial Building Allowances fall under the Capital Allowance Act 2001 legislation. Industrial Building Allowances are for expenditure incurred on Industrial Buildings and Industrial Building Allowances depend upon certain tenant trades. Industrial Building Allowances are based upon the original construction costs and Industrial Building Allowances attract relief at 4% per annum, on a straight line basis. Industrial Building Allowances start at the date when the building was first let and Industrial Building Allowances last 25 years from the date first let.
Plant and Machinery Allowances
Plant and Machinery Allowances can produce substantial savings to investors and owners of property to mitigate the levels of tax paid on profits. Plant and Machinery Allowances can be available on many different items within a property from air conditioning systems, to carpet. Plant and Machinery Allowances claims are calculated with reference to the Capital Allowance Act 2001, in conjunction with case law, however, it is a "valuation" exercise and Plant and Machinery Allowances are not an exact science.
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