Accountants Smith & Williamson warn over potential impact of major property tax change

February 21, 2014

Commercial property owners and investors could lose out on hundreds of thousands of pounds of tax relief under new capital allowance rules that come into force in April.

The changes will restrict an owner’s ability to claim relief on the cost of the fixtures and fittings of a commercial building. At present, this spending can be claimed retrospectively as a capital allowance.

According to tax specialists at the Bristol office of accountancy and investment management group Smith & Williamson, many property owners and advisers remain unaware of the changes and the impact they could have.

Partner Paul Bray, pictured, said: “From April this relief cannot be claimed after the property is sold unless the capital expenditure is identified, valued and reported at the point when the property changes hands.

“The seller and buyer must follow a procedure under which they agree to pool the capital expenditure and notify HMRC of the apportionment. It’s worrying that many professional advisers and taxpayers are still unaware of the impending change and the implications for new owners of freehold properties, who should be taking appropriate advice to ensure they do not lose out on valuable allowances.”

The new rules were introduced in 2012 but with a start date in April 2014 – the two-year transition period written into the legislation recognising the huge effect they could have on the property industry.


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