The chance to claim super-sized allowances (super deductions) for one year from 1 April 2021 to 31 March 2022 is an opportunity not to be missed.
Commercial building projects of all kinds can benefit where the assets are held as investments.
Even those that fail to meet the criteria for the new allowances may still be able to access other allowances and tax reliefs. In particular, property developers who hold the developments as a trade can claim additional relief under the contaminated land relief provisions.
Gemma Brindley, Corporate Tax Director who leads Crowe’s property team in the South West, looks at the benefits of these allowances.
Commercial concerns which lease property can claim super deductions for eligible assets in their leased buildings, as can any company (excluding partnerships and LLPs) provided it pays UK corporate tax and holds the asset as an investment.
The 50% allowance refers specifically to assets built into the building to help it function; this can include lifts, heating systems, and ventilation systems.
If your expenditure is eligible under the Structural Building Allowance, you will not be able to claim the super deduction. However, the new short-term allowance is available for all other eligible expenditures, provided the contract was entered into after 3 March 2021 and that the goods are paid for within the qualifying period – 1 April 2021 to 31 March 2022.
The enhanced Annual Investment Allowance (AIA) of 100% can still be claimed on the first £1 million of eligible plant and machinery and integral features.
The 100% rate on AIA will end on 31 December 2021. If you haven’t done so already, this may be your last chance to review whether you can benefit before the enhanced rate is removed.
Another boost for all property developers, including residential, is the not unexpected May ‘roller blind’ VAT announcement by HMRC.
This announcement means eligible rollerblinds and shutters qualify as building materials and are consequently zero-rated for VAT.
This is good news for developers, housing associations, buy-to-let landlords, and DIY self-builders who install eligible blinds and shutters in the property they are developing. The zero-rating applies to eligible purchases made on or after 5 October 2020.
Construction companies should benefit from the new level of allowances, whether they hold the asset themselves as an investment, or because of the opportunity to claim these super deductions by their clients.
The larger the construction project, the greater the potential benefit. As with all generous allowances, getting the specifications and detail right makes all the difference.
Other allowances and reliefs are available. For help and guidance on what constitutes ‘eligible’ and whether you can benefit from current allowances, please contact Gemma Brindley who leads Crowe’s property team in the South West.