Fixtures in Buildings – Proposed Rule Changes

26th Jan 2012

Action may be required by property owners if they are to obtain the maximum available tax relief on their expenditure on a building ...

For many years, a property owner has been able to make a claim for tax relief for expenditure on fixtures as long as this relief had not previously been claimed by them. There was no time limit for the claim. Fixtures for this purpose are items such as heating and air conditioning systems, electrical systems, plumbing and units in kitchens, toilets and other similar items.

HM Revenue and Customs plans to change these rules in April 2012. With effect from then, any claim must be made within two years of the acquisition of the property. In addition, the claim will need to take into account the tax relief claimed by the previous owner of the property under an agreement with that previous owner about the sale price of those fixtures.
The impact of these changes will be huge. Property owners who will be affected include commercial landlords, owners of furnished holiday lettings, and businesses which trade from properties owned by the business. The key point for urgent action is that a review must be undertaken of the value of fixtures acquired when the property was bought, to identify the fixtures included within that acquisition and their value and claim the appropriate tax relief before it is too late.
We have clients who have been able to make additional claims for tax relief of hundreds of thousands of pounds simply by instructing a suitably qualified surveyor to identify the fixtures in the building and their value, including clients who own furnished holiday let properties who had no idea that tax relief could be claimed on a part of the acquisition cost of the house relating to fixtures. It seems to be an opportunity too good to be missed!

Author: Emma Glover (emma.glover@rowlandsaccountants.co.uk)

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