Embedded Capital Allowances

Agencies and other headaches, keys and cleaners, running costs and contracts...in short, all the things we spend so much of our time doing behind the scenes.<br>
Pengman
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Joined: Mon Apr 22, 2019 4:54 pm
Location: Portland, Dorset UK

Embedded Capital Allowances

Post by Pengman »

Is everybody on here claiming for 'embedded capital allowances'? (Google it if you're unfamiliar with the term). To claim, you have to be a UK taxplayer but I'm not sure if the property itself has to be in the UK, although mine is. There are shedloads of specialist firms who will do the claim for you, and on a no-win no-fee contingency fee basis too, so there's nothing to lose and potentially a lot to gain (in my case an estimated £7k- £14k depending on my tax situation over the next 5 to 10 years, and my property only sleeps 4 so is relatively small). I'm surprised there was nothing on this forum about it.
I came, I saw, I bought it.
Joanna
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Re: Embedded Capital Allowances

Post by Joanna »

This is news to me. I Googled it but I'm still not sure what it means! Have you made a claim yet?
Jo

Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
Pengman
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Joined: Mon Apr 22, 2019 4:54 pm
Location: Portland, Dorset UK

Re: Embedded Capital Allowances

Post by Pengman »

Joanna wrote: Wed Apr 27, 2022 3:14 pm This is news to me. I Googled it but I'm still not sure what it means! Have you made a claim yet?
I’ve recently appointed a firm to prepare a claim for me and to agree it with HMRC. If things go to plan I should cover 75% of their fee (which they will invoice as soon as they’ve agreed it with HMRC and which I’ll then have 14 days to pay) by a combination of a prompt repayment of tax paid for 20/21 and a reduction of tax due for payment by 31.07.22. Thereafter I will benefit from year on year reductions of tax otherwise due during the next 5-10 years. I ran it past my accountant, which the firm I appointed encouraged me to do, before signing up. The way I look at it, it’s a bit like a stock market investment in that the rewards are gained over the medium/long term, although the outcome should be far more certain. So in a couple of months I should be in a position to discuss if from the perspective of someone having recently had a claim agreed with HMRC.
I came, I saw, I bought it.
newtimber
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Re: Embedded Capital Allowances

Post by newtimber »

Pengman wrote: Wed Apr 27, 2022 8:53 pm
Joanna wrote: Wed Apr 27, 2022 3:14 pm This is news to me. I Googled it but I'm still not sure what it means! Have you made a claim yet?
I ran it past my accountant, which the firm I appointed encouraged me to do, before signing up.
You're effectively employing 2 accountants. Why don't you change your accountant for one that does know about embedded capital allowances - they aren't rocket science.

I can though understand using these specialists if you don't otherwise use an accountant and do everything yourself.
Pengman
Posts: 115
Joined: Mon Apr 22, 2019 4:54 pm
Location: Portland, Dorset UK

Re: Embedded Capital Allowances

Post by Pengman »

newtimber wrote: Thu Apr 28, 2022 2:19 pm You're effectively employing 2 accountants. Why don't you change your accountant for one that does know about embedded capital allowances - they aren't rocket science.
Not the case actually. Embedded capital allowances require knowledge of and expertise in construction costs and is therefore the natural territory of Chartered Quantity Surveyors (CQS) who, amongst other data, have ready access to RICS/BCIS construction cost data and the regional variation of same, which is readily accepted by HMRC. Most CQSs who work in this field specialise in it and establish firms that do little else. Also, I’ve worked with the same accountant and his predecessor for over 30 years and have no reason to change now.
I came, I saw, I bought it.
Pengman
Posts: 115
Joined: Mon Apr 22, 2019 4:54 pm
Location: Portland, Dorset UK

Re: Embedded Capital Allowances

Post by Pengman »

I'm pleased to report that having appointed a firm to prepare a Capital Allowances Claim on my behalf, this has now been done and agreed with HMRC. After having paid their fee and a reduced tax payment on account for tax due on 31st July, I am over £600 out of pocket. However, going forward I have a healthy capital allowances figure agreed with HMRC that can be be carried forward to reduce tax year on year until the allowances are used up or until my property is sold, whichever comes first, and if the latter the oustanding allwances can be used to reduce Capital Gains Tax. And I should be cash positive by tax year 2022/23 after which it's tax savings all the way. So assuming you're able to take a cash flow hit for the first year or two, it's definitely something worth doing. And if, unlike me, you're a high rate tax payer, you probably won't take a cash flow hit at all. PM me if you want further information such as who I used and their contact details etc.
I came, I saw, I bought it.
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