DESPITE the economy gradually making a recovery, it’s no great surprise that veterinary practice owners are striving to keep costs to a minimum and make every penny count.
But it needn’t be the case and there is a glimmer of hope. Why? Due to an obscure area of tax – capital allowances (that have been sitting unclaimed for years) – practitioners who own their commercial premises could be due significant tax relief from HMRC.
In addition, it simply isn’t the remit of the trusted accountants of veterinary practices to investigate the unclaimed capital allowances that can be found in these properties.
What exactly are capital allowances?
In short, capital allowances are a form of tax relief available to anyone who incurs capital expenditure buying, building or renovating commercial property. Put simply, they are a means of reducing your tax bill.
In fact, our comprehensive research shows that the UK’s commercial property owners are sitting on an estimated £1billion in this form of tax relief.
How can practice owners claim this relief?
Capital allowances can be claimed on the fixtures and fittings in the building which might include air conditioning, heating systems, pipework, lighting, security and drainage. Practice owners will be only too familiar with the cost of fitting these items given the need for extra electronics, lights, sprinkler systems and plumbing in each clinic.
Acting on behalf of a small purpose-built veterinary practice, Catax Solutions uncovered a sizeable £125,170 in capital allowances. And to give an idea of the items identified and where relief was owed, this was broken down to include £6,625 for disposal and drainage installations, £9,970 for water installations, £43,118 for heating installations, £4,788 on ventilation installations, £35,062 for electrical fittings, £8,216 for communication installations, £6,733 for security installations and £10,657 for fixed internal fittings.
This was worth in the region of £50,068 to the client, a 40% tax payer, so clearly there are significant savings to your tax bill to be made. Better still, Catax Solutions will only charge a fee if it is able to identify a sizeable amount of unclaimed capital allowances. All in all, it’s very worthwhile investigating to find out whether you have a claim.
Important changes to capital allowances legislation
Sound too good to be true? Recent legislative changes mean that commercial property owners, and that definitely includes veterinary practice owners, must be more aware than ever of how to claim. Since 1st April 2014, when the 2012 Finance Bill was implemented following a two-year transition period, a sizeable proportion of that unclaimed tax relief is going to be lost forever if people aren’t savvy about how to claim. For anyone who owns commercial property (including veterinary surgeries), it’s now law that unless unclaimed capital allowances are identified and documented at the point at which the properties are bought or sold, they will be lost forever.
Why have capital allowances not been on the radar of practice owners?
Very few of the parties involved in commercial property transactions – the owners, lawyers, financial advisers and accountants – understand the new changes to the tax regime. In some cases they are not aware of it at all.
The result is that a very large percentage of transactions are likely to take place this year where all unclaimed capital allowances relief is lost to both the buyer and the seller. This will continue during the following tax years unless awareness of this area improves.
Fundamentally, capital allowances are your right and not a privilege; if you own a veterinary practice and/or have made significant improvements to it, you deserve the tax bene t and there’s no time like the present to investigate whether your practice qualifies for capital allowances relief.
- For details see www.cataxsolutions.co.uk