Construction projects ― capital allowances considerations

Produced by Tolley in association with Martin Wilson and Steven Bone
Construction projects ― capital allowances considerations

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Martin Wilson and Steven Bone provides comprehensive and up to date tax information covering:

  • Construction projects ― capital allowances considerations
  • Property developers
  • Potential allowances
  • Incidental and installation costs
  • Demolition costs
  • Refurbishment
  • General considerations

Capital allowances are available on construction work on commercial property where the completed building will be classified as a tangible fixed asset in the financial statements of a company, such as:

  1. companies constructing buildings for use in the business

  2. companies refurbishing / fitting out an existing property for use in the business

Capital allowances may also be available on the construction of a building to be held as an investment by a property investment company.

The main capital allowances available will be for fixtures and other plant and machinery, and for construction expenditure on structures and buildings incurred on or after 29 October 2018.

In order to maximise the level of capital allowances available, it is important to carry out detailed planning before, during and after construction and to retain appropriate supporting documentation. In particular, it is worth emphasising that while construction expenditure attracts allowances of up to 3% per annum, expenditure on plant may be relieved at rates up to 100%. Businesses should therefore avoid complacency and make every effort to properly identify expenditure on fixtures and other plant.

Construction projects may take several years to complete and consequently the timing of expenditure must be considered when compiling the relevant capital allowances claims. The basic rule set out in CAA 2001, s 5 is that expenditure is ‘incurred’

Popular documents