Pictured: Owen Kyffin, Tax Partner at Whitley Stimpson

In May 2011 HM Revenue & Customs issued a consultation paper proposing major changes to the rules that allow capital allowances claims for plant and machinery fixtures in buildings, which will have an impact on all property owner-occupiers and investors. 

If you have bought, built, refurbished or renovated commercial premises and still own the building, you should understand the proposed changes and act as appropriate. It may be that your ability to claim tax relief for capital allowances expenditure is otherwise significantly diminished in the future.  

The changes, if as is widely expected pass into law, will come into effect from 6 April 2012. The proposals will impose a time limit on capital allowances claims which means they will have to be made within one year of expenditure being made. 

If a claim is not made in this time limit then no capital allowances will be available to either the original owner or any subsequent purchaser. 

These measures are likely to mean that many businesses and commercial landlords will miss out on allowances that they are entitled to in respect of business expenditure which they have incurred.

Within commercial properties including factories, retail units, offices and hotels, capital allowances available on fixed items within the building can be significant. According to HMRC's definitions, fixtures will include items such as lifts, water installations, air-conditioning units, sanitary fittings as well as general mechanical and electrical installations.

Owen Kyffin, Tax Partner at Whitley Stimpson explains: "The level of tax relief allowable varies depending on the property type and specification, with typically 20-30% of the purchase or refurbishment expenditure qualifying for capital allowances.

It is therefore essential that owners who have in recent years acquired new business premises, or have incurred costs on refitting and refurbishment review this expenditure before the new legislation takes effect."

For further information contact Whitley Stimpson's specialist taxation department, led by Tax Partner Owen Kyffin on 01295 270200 or email: owenk@whitleystimpson.co.uk.