Recent changes to capital allowances tax relief legislation means caravan and lodge homes meeting certain technical and rental conditions, are now deemed furnished holiday let’s and therefore commercial property under HMRC rules.
In essence 100% of the purchase cost could qualify for capital allowance tax relief (The issues of decking, hot tubs etc will need to looked at separately) depending on the clients usage and personal circumstances.
For UK tax payers this could result in considerable tax relief opportunities for property investment clients.
All commercial property contains plant and equipment that qualifies for capital allowance tax relief.
Therefore it is important to know about any unidentified qualifying plant within your property.
Why? Because it will help save money on your tax bill and therefore increase your profits.
Capital allowances are a tax deduction to allow for the wearing out of qualifying plant and machinery over time. The tax definition of plant and machinery in commercial property is rarely understood, and includes items such as heating systems and air conditioning equipment, electrical systems, alarm systems, lighting, sanitary ware and lift equipment. Please feel free to refer to the following HMRC guidance;
It is almost impossible for the full value of eligible plant and equipment to be identified and valued by accountants or non specialist surveyors and tax advisors. However, by utilising the services of Savills specialist chartered surveyors and tax advisors, who by working side by side with your accountants, are typically able to uncover and secure tax relief of 90% of the purchase price of qualifying caravan and lodge homes.
Who can benefit?
This service is of significant benefit for UK taxpaying individuals and companies who have bought lodge homes to let out, and who meet the following qualifying letting criteria.
- Available to be let for at least 210 days per year
- Actually let for a minimum of 105 days per year
- Not let to the same person for periods of more than 31 days, for more than 155 days in a year.
What is the service now available to lodge home/ caravan investment clients?
We are working in association with Savills the UK’s leading Property Services firm, to identify and categorise all assets that will qualify for capital allowances tax relief, and therefore reduce our clients UK tax liability. This service includes the identification and valuation of the assets qualifying for capital allowances and the production of a detailed valuation report ready to be included within tax returns, and to be submitted to HMRC.
What are the fees?
Savills undertake an initial free of charge and no obligation review of your properties, to assess the feasibility and value of any potential claim.
If, after the initial review, you decide to engage the services of Savills for a full valuation, fees will be performance based, pre agreed, and in direct relation to the value of the unclaimed qualifying capital allowances identified.
If no unclaimed qualifying tax relief is uncovered, there are no fees to pay.
Capital Allowances on commercial property expenditure are rarely maximised. This is due to shifting tax legislation and the requirement for specialist valuation procedures. The complexity of modern buildings contributes too. Savills have developed a fully disclosed valuation methodology that meets the specific requirements of HMRC. Their proven multi–disciplinary approach utilises a combination of specialist forensic skills, combined with a well-established understanding with HMRC, built on years of experience in submitting claims, and agreeing values.