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so thank you very much for inviting me here to the Oxford belfry interestingly I live about quarter a mile from the Cambridge belfry I’m not there’s any competition between Oxford and Cambridge of course but to have to say this one’s much nicer I should actually say that so an introduction to capital allowances quite a complex tax subject we’ll be talking about for the next three hours only joke and of course about 40 minutes or so I’ll go over the very basics of capital ounces and introduce the subject to you there will be a bit of a competition partway through just an informal one for you so today you’re going to get an overview of capital ounces this magical word I’ll show you what types of properties will qualify for this tax rate typical savings some examples of some properties as well so you can relate it to the real world and some quirky tax reliefs which quite funny might apply to some of you so capital ounces what capital allowance has cover a whole host of very exciting tax reliefs who is excited by tax relief as much as me of course I can tell you all well so firstly we’re going to go over plant and machinery allowances that we’re going to talk about building premises renovation allowance just trips off the tongue that wonders bpa and remediation relief not as exciting as it actually sounds enhanced capital ounces for the future environmentally friendly solutions and flat conversion allowances which are perhaps a lot more used than you would think excited already of course okay so capital allowances are a tax relief for capital expenditure on items of plant and machinery but what is plant and machinery interesting question thanks for asking plants of machinery interestingly there’s no definition you go to the revenue and that even says there is no definition of what’s plant and machinery so you can assume certain items which you can see them certain things which can be determined to be planted Machinery mainly from case law so over the last number of years there’s been various cases where people have gone to the revenue and said you know I think these are items are plant and machinery let’s have a discussion around that they do and in some cases the revenue backs down and says okay yes we accept it right of a plant and machinery so yeah so there’s there’s a whole host of these things some typical examples are here electrical systems we’ve got installations cold water solar shading heating air conditioning these are all the main things that you would expect normally you say plant and machinery most people think what diggers tractors you know that that sort of thing hi max I never knew what a high Mac was until about two years ago but I shan’t bore you with that either lifts escalators and a whole host of other things these magical things which are deemed to be plant and machinery so as many more of these but again this determined on a case law basis so why do we have them well surprise surprise depreciation is not tax deductible now there’ll be business owners here and you get this magical thing called a profit and loss account we’re all aware of what a profit and loss account is where you have your income your turnover your operation costs and it gives you a nicer net profit hopefully a big net profit at the bottom we all love a net profit yes we do but there’s also a depreciation charge in there where you spread the cost of that asset over is useful economic life five ten fifteen years whatever it might be which is fine everybody accepts that but when it comes to doing your tax computations who loves a good tax comp yes I’m sure you do when you do your tax computations depreciation is not tax deductible instead the revenue allow you to claim these things call capital allowances but if that’s new to you you might think well when did this happen and this is where the quiz comes in who loves who loves history anybody good at history yeah favorite year 1945 of course it is but guess the year so guess which year this happened Benjamin Disraeli the first Earl of Beaconsfield and VY count Hugh ndon he introduced the world titles out

to promote his close friend Queen Victoria which year was he Prime Minister anybody guess and he guesses 1880 I was a good guess I like that let’s try this one Sir William Armstrong is the first home to have an electric light bulb you imagine that Hey you can’t live without him anymore any ideas which here that was 1890 hmm very good you know your light bulbs I like it Queen Victoria she was on the phone first Empress of India did you know she had nine children can anybody name them that was her husband I’m sure she had Sybil she survived six assassination attempts the year that all these things happened it was of course 1878 so very good someone who said 1880 there now interesting story back in the the late 19th century the Treasury at the time didn’t have much money much like today you could argue so they got together and they said right ok this isn’t very good we haven’t got much money what can we do to influence this so they decided that one of the few things I could influence is the depreciation of certain assets because the companies and businesses were depreciating their assets how they wanted to do it so really they were depreciated them quickly so they had less profits therefore paying less tax but the Treasury didn’t like that so they introduced the wear-and-tear act different to today’s meaning of wear and tear but they introduced that in 1878 and that act went on to say that as I explained depreciation is not tax deductible instead we the Treasury the revenue will tell you how to taxed appreciate your assets and hence capital allowances was born so there you go a bit of a bit of history there for you so if you invest money which you do because you’re buying properties if you buy holiday home a multi let’s than you as an investor or contributing to the economy how good do you feel now contributing to the economy that’s fantastic you’re increasing the circulation of money using services good builders all those local people you employ generating and creating business God you must feel really good now and for this you’re entitled to get some tax relief even better that’s the icing on the cake isn’t it not only are you investing contributing to the economy making profits they also entitled to some tax relief amazing you must feel so happy when you wake up in the morning so there’s a few things we should know about capital allowances first of all it’s not restricted to property profits so what does that mean well if you think about it like this you might have lots of different income streams you might have income from property on one side you might have dividend income you might have a job anybody got a job Jo B yeah well done you pay income tax on those jobs so you have lots of different income streams and what capital ounces allow you to do is they allow you to take the tax relief from your properties and use it against any other taxable income while sounds like a good idea doesn’t it I like the sound of that so I own these properties they attract tax relief and I can use that to offset the tax as I play on my job I think that’s great and I love the idea of going into someone’s business and perhaps somebody saying to their boss you know how much did you earn last year yes I earned this yes but I got all my tax back how much tax did you get back so you could actually be earning more than your boss who likes the idea of earning more than their boss of course you do it sounds great so you can claim on holiday next commercial properties and residential works as well capital ounces between 8% and a hundred and fifty percent of your investments one hundred and fifty percent that’s a typo no naturally in some investments if you spend a pound you can get one pound fifty back in tax relief well that’s mad isn’t it I’ll show you I’ll show you how that works and the revenue say that 96% of people haven’t claimed it’s just ridiculous isn’t it the world’s gone mad there you go I’ll expand on that so what are they worth what our capital allowance is worth well the value you have to look at everybody’s individual cases is there’s a whole host of variables if you don’t pay any tax how much tax are you going to get back exactly so you could own 10 million

pounds worth of property no capital allowances are worth anything for you if you don’t pay any tax the capital allowances that you’re identifying is not what you get back in a tax saving so you have to take your tax rate into account so very simply there’s a three little walls down here and it’s helpful if we remember those I hopefully you can all see those eyes screens at the back well done well planned rule number one capital ounces save tax so there must be a liability so I was talking to somebody earlier who hadn’t paid any tax for the last five years but in the year coming they’ve got a tax liability and that is when they would benefit from capital allowances rule number two they cannot be claimed by non taxpayers such as pension funds so who do you think has lots and lots of property in the UK that can’t claim any of these but okay part four pension funds I guess as well as their local authorities for example all of the buildings that they own masses and masses of them because they don’t pay tax of course they don’t operate on a profit basis they can’t benefit from any capital allowances which is good from a compliance point of view the if you buy a property from one of these entities you know that you are entitled to all these allowances I’ll talk a bit more about that a bit later I’m number three capital ounces are valuable to a business person rope so I’ll have to read it the temporary has no tax liability so if you can’t use them they may be a value later or to someone who owns the asset in the future so what that means is is that if you have a loss a property loss and you want to increase that loss for whatever reason you can use the allowances to do so and it will just prolong the amount of time that you have until you pay tax and there could be certain circumstances when that’s beneficial so here’s some typical values of some some properties that we find just to give you an idea on what they’re worth nice big fancy offices that we have sometimes up to 50% of their value our items are plant and machinery within them actually you’ve got heating cooling air conditioning cat5 installations see these funky underfloor power and false floors what they do in offices all those sorts of things security all ad and hotels as well hotels are great swimming pools are items of plants and machinery would you believe so therefore you can claim for those and some more ideas on there now what can be claimed so you buy a property who here has bought a property yes I’m sure you all have so you buy a property what do you buy you buy bricks bricks and your property yeah there’s bricks in your property as a roof on your property you would like to hope you buy those you buy the foundations and your property you hope so but you also buy everything within it or the pipe work or the electrical wiring or the doors or the carpets or the kitchenware or the sanitary ware all of those are items of plants and machinery so therefore because you’ve bought those you’re entitled to claim those as tax relief why sounds a little bit exciting doesn’t it if you develop a property you’re going to incur expenditure on items which are plants and machinery so you can claim those and you refurbish or alter existing property you can do the same an expenditure incurred directly or indirectly on land remediation relief there’s that word again and remediation relief well spotted you know a bit more about that a bit later and again expenditure incurred to bring in back into use a building which was previously derelict who enjoys looking around a nice derelict building yeah be honest we all do don’t we I should keep an eye out for derelict buildings there’s some really good tax reliefs which which I shall share with you so how can they be claimed through the self-assessment process tax returns yet we’re all probably in the process of organizing tax returns and you’re probably all very efficient and then it months ago I’m sure but if you claim them through the tax tax assessment service very easy there’s some boxes you should remember I did make a mistake and quote last year’s boxes on the tax return not this years but I think it’s box number thirty four thirty two and box number forty two I believe this year in your tax return very important boxes if you don’t fill those in you can’t get the capital allowances tax roof it relates to property related profits and again not restricted against any taxable income and amendments can be done for

open tax years so many people are not aware of this so you did your tax return last year for the ten eleven tax year did you know you can still go back and change that tax return so if you’ve if you want to claim capital allowances in that tax year I mean you’re gonna be quick you’ve only got about eight days to do it but once you’ve submitted your return the revenue still give you another year to make any changes to it so you can go back and and amend that not a lot of people know that sounded like a paul daniels was it used to say that so yeah that’s that’s quite an interesting thing to do so it means that it opens up more tax available to you to go back it’s a tax mitigation process there’s no credits available although now I’ve just said that there is actually one credit available this magic land remediation relief which I’ll cover very shortly I can see that you can’t contain your excitement much further so here’s how it works in the real world this is Johnny well this isn’t Johnny this is Johnny’s numbers but this is based on Johnny Johnny is a very lucky chap he’s got a job he gets some income which is happy he’s also got an investment as well so he earns thirty five thousand pounds a year he’s happy with that but he pays tax he’s not so happy about that so the way that it works is there’s his taxable income he’s got 10,000 pound profits from his property portfolio so his total income is 45,000 it has his personal ounce of seven and a half and so his net taxable income it’s thirty seven and a half thousand the tax he would pay on that would be eight thousand pounds but he’s not so happy about that so he phones me up and he says Arthur say hello yes can I help we have a bit of a dialogue I say if I find you ten thousand pounds from number if I find you ten thousand pounds here’s how it will look and we talk through it so he’s still at his job thirty-five thousand pounds the ten thousand pounds worth of allowances will go off against his property income so that drops his net taxable income to twenty-seven thousand pounds and therefore his tax paid will be five and a half thousand pounds that’s pretty straightforward isn’t it so I’ve saved him two and a half thousand pounds I said three thousand pounds last year realised I’ve got it what but I say if we find you more say we find you fifteen thousand pounds here’s how it will work you still have your income through your job well done still employed thirty-five thousand pounds congratulations the profit from your property is wiped out by ten or fifteen thousand so you still have your personal allowance everybody gets that automatically you’ve got an additional 5,000 pounds loss augmented by capital allowances good word that thanks 5,000 pounds see now your net taxable income is 22 and a half so it down to four and a half thousand pounds of tax from eight thousand and of course he’s very pleased with that so that’s just an idea of how it works in the real word exciting isn’t it Oh still awake well done now do you have to give these allowances back well if you claim capital ounces and you sell your property that your claim capital ounces are on there is a chance that that tax relief could be clawback however there’s a few things that can be done to stop that the main one is to have what they call section 198 election core that sounds exciting section 198 election I’m sure you’ve all heard of people buying assets for a pound and you buy a big property and all of the all of the furniture and fixtures and fittings you buy for a pound that is an example of a section 198 election it’s becoming more relevant because the rules are changing to put into force the spalling which has to be done from 2014 onwards but for the time being what you would do is you would say yes I’m still selling that property for three hundred four hundred thousand but the plant and machinery within that property I’m selling you for a pound so I sell the property for three hundred ninety nine thousand nine hundred ninety nine and the plant and machinery for a pound it won’t change the sale price but it means you’re entitled to claim the rest of the allowances you’ve already identified now there’s some a few things we should talk about this very briefly because invariably when you buy property it might be the previous owner has already claims unless you buy from the local authority or a pension fund and they they obviously can’t do it so part of the compliance process that we have to go through is to

all of the previous owners back to July 96 I’ve got a lady in my office called Jill who’s very nice lady should my Compliance Manager and that’s her job to check everything this is kind of a how long is a piece of string kind of job I’ll give you an example a very quick process would be a client of mine bought a property in Bournemouth Road in pull very nice part of Bournemouth I’ll pull my suppose and I phoned the previous owner up a gentleman called Steve Bolton you might have heard of him I find him up and I said hello your eminence my name’s sir my name’s Arthur I’m phoning up to check if you’ve claimed any capital ounces and this was about three and a half four years ago and he said no he said climbed any capital allowances don’t know what you’re talking about so that was very easy and we could check the previous owners and get contact details and assess very quickly that nobody had claimed any capital allowances which is fine which means the new owner my client is entitled to claim all of the allowances there’s none of this a clawback going on and that was a very quick solution right at the other end of the scale it can sometimes take months to find out a who the previous owners are and be get confirmation if they’ve claimed capital ounces can you imagine the most efficient of businesses let’s say a banks for example very often banks owned properties and how difficult do you think it is to try in a speak to the right person in the bank they would know about that property and be for them to get the right paperwork out to you I’ll give you a clue not very easy so sometimes it takes a long time so whenever we take a case on the time it takes to complete it varies depending on how difficult the history is of that property some cases is very easy like er Steve so that’s that’s something we should be aware of different types of qualifying expenditure attract annual allowances at different rates annual allowances there they’re even more exciting than I thought and you can claim them on the first of expenditure so what is the value of plant and machinery so we talked a lot about these values of plants and machinery how quickly can you get them if you buy property today that’s got a hundred thousand pounds worth of capital allowance isn’t it can I use those all at once well the answer is maybe not very clear I’ll grant you but generally you can claim on general plants 18 percent per year of the value that is found integral features 8 percent a year thermal installation 8 percent a long life assets 8% but energy-saving plants a hundred percent in year one and of course the government are very good at this the government are very proactive when it comes to carbon neutral and the carbon footprint and all the agreements they have to make so they encourage you as investors to buy any environmentally-friendly plant than you can and if you do if you have a boiler that meets certain requirements in terms of energy efficiency you can claim the cost of that boiler all at once in year one more about that very shortly so when are they available April 2008 I’m sure we all remember exactly where we were on that day April 2008 the revenue stopped using what they called first year allowances I’ll give you a I’ll give you an example I used to be the UK accounting manager for a large without saying their name Swedish furniture blue-and-yellow company and invariably they would spend quite a lot of money on building new stores you know they’re not cheap Bobby and for sake of argument if they spend 50 million pounds building a store there would be say 20 million pounds worth of plant and machinery as an example before April 2008 the revenue said ok in year 1 when you buy or make that acquisition or building you can claim 50% of it as a first year allowance which was great 10 million pounds worth for tax relief in year 1 fantastic April 2008 they stopped first year allowances and they introduced the annual investment allowance good move you might think but here’s the thing the annual investment allowance was limited to 50,000 pounds at the time so all of a sudden if you’re a large business that has these properties you’re 10 million pounds worth of tax relief goes down to 50 thousand pounds well that’s not great is it no that’s not good at all that means more tax bills and that was partly

why the annual investment allowance was introduced because it reduced businesses tax relief and therefore increase their profits more profits more tax thank you very much so that’s why they introduced the annual investment allowance and you may all be aware that in the autumn statement the Chancellor god bless him increased the annual investment allowance from 25 thousand pounds to 250 thousand pounds that means if you buy property that attracts 250,000 pounds worth of capital allowances you can earn that much tax-free who wants to earn a quarter million pounds tax-free this year yes thank you there’s only about five people doing that madness so they every year the first year allows used to change 40 or 50 percent depending on the various Finance Act for that particular year but they introduced this annual investment allowance too so yeah what is it well I think I probably just explained that yes so it was it was 25 thousand pounds and there was so much pressure from the everybody in business the Chamber of Commerce at various other professional bodies went to the Chancellor and said look 25 thousand pounds for people investing in property is not very much give them something to to get excited about so he increased this level to two hundred and fifty thousand pounds which covers I think it’s 96 or 98 percent of businesses and individuals that invest in property so you can claim your tax relief very exciting exciting stuff so why are they automatically claimed by accountants now accountants are very very good this is a particularly nisha area of tax and you need to have a number of different skills in order to be able to I visit the site identify what is actually legally plant and machinery to be able to value those assets and to be able to understand how it links with tax relief and make sure that all the reports are produced in accordance with the revenues own guidelines so it’s not because it is such a niche area of tax is not something that most accountants in practice will get involved with but I did a very good job I’m not saying anything about that on there so types of capital ounces the exciting bits types of capital allowances properties so we talked about plant and machinery allowances so they include these various items and we put on here our heating and air conditioning lifts everybody likes a good lift wiring to fix plants switch gear emergency lighting fire alarms sound all these things which are deemed to be plant and machinery and it’s not exhaustive but it gives you an idea of the sorts of things that qualify and it varies from 100 percent to 8 percent tax relief so here we have a good looking building isn’t it so this in Milton Keynes is a block of flats very nice block of flats bought for 3 million pounds and it was I’ll say build date and July 2009 it was kind of complicated but somebody bought it directly from the builders and the capital allowances that property attracts lifts underground parking all this sort of thing was a four hundred fifty-five thousand pounds so what that meant to the owner it was owned by a corporation a limited company it meant that they reduced their tax bill their corporation tax bill by ninety five thousand pounds and this was something that it always he bought the property for investment purposes to generate rental income from the 21:21 self-contained flats if I remember correctly they’re using it to generate profits and the tax relief is an added bonus to them but nevertheless a welcome one know where to point this there you go let’s lose the property in Oakshott well if anybody’s ever been to Oakshott lovely part of the world this was bought for four hundred and thirty five thousand pounds if my memory serves me correctly because it was quite a while ago the owner bought it as a family home to live with his family and then had a job offer abroad I believe so let it out there’s a multi left I think enlisted outs of four or five different individuals obviously we went in there and undertook a survey all the communal areas of the properties the non dwelling areas we identified the plant and machinery thirty-five thousand pounds of capital ounces he was a forty percent tax rate 40 percent tax rate payer at the time meaning they got fourteen thousand pounds of his tax bill it was

quite happy with that for that particular year but that gives you an idea of kind of the higher-end multi let’s to be fair not many multi let’s you find like that I certainly I don’t this one was a property in Cyprus very nice I must admit I did have to pull rank over my surveyors and they have to go out and do this one but typical isn’t it idle there and it’s pretty cloudy could you would you believe it so this was a very nice place so lucky the people that developed this they managed they’re quite in with the church in Cyprus and they managed to get a big pot of land where they build about ten of these on there sold them off right on Turtle Beach which is owned by the church and they got the land developed these really nice holiday that’s built in December few years ago and yeah nearly half a million pounds worth of capital allowances the owners married couple about forty percent tax payers so over time is going to save a Millie 200,000 pounds of their tax bill so that very nice I did enjoy that one although the wife wanted to go with me which costs anyway so this is a pub I’ll grant you not the nicest pub in the world but nevertheless pub called the cricketers arms in Preston if you ever go to Preston I wouldn’t recommend this publish not it’s not that great but bought four hundred and forty thousand pounds the owner has done something with his properties which I’ve got another example of a bit later he likes to buy older properties like this and convert them into more residential properties some great tax reliefs there as well that says build date would he actually bought it in December 2010 and we’d identified about nineteen thousand pounds in cash savings for him for that particular particular property massive out the back that property very nice this is Northampton this is more like it Northampton great place if you’ve ever been not this part unfortunately eighty five thousand pounds this property was bought for eighty five thousand pounds behind a property for eighty five thousand pounds we are identified under the 60608 rules I’ll come on to that a bit later nearly seventeen thousand pounds worth of allowances which saves the owner three and a half thousand pounds off their tax bill but let’s put this in perspective how much money would you have to put down for an eighty five thousand pound prop fifteen twenty thousand pounds something like that to get three and a half back that makes a massive difference to your investment they’re phenomenal and obviously still getting rental income the main purpose of the investment of course is to get make your profits and that should always be the first thing that you you look towards you make the business decision to buy the property and the tax element of it is almost like a an added bonus tax bonus this is in Birmingham one hundred ninety five thousand pounds twenty percent taxpayer not an awful lot of this property did qualify but still save the owner three thousand pounds and funny story I’ll tell you another time more pulling for different companies we say so this is a dentist surgery where they bought the original site leveled it and built Adventist Surgery there a couple of years ago 18 months ago so and we identified quite a large proportion because they’ve already bought the land we don’t have to take into account the land valuation so it is purely just the build costs and of course more of the actual overall investment is planted machinery as well as apportioning it to the land so again to dentists I mean who knows a poor dentist no one right they’re always they always do well so they’re 40% tax payers so they they’re saving over 80,000 pounds of their tax bill Lincoln now this is interesting this is a really nice place it is somebody said it’s a school it was actually I got I remember it was a care home beforehand owned by the local council what clients here the company took over the running of that care home are very quickly closed it down so they were entitled to claim the capital allowances of the business when they took it over because it’s a local council they fitted it out to a really high standard can’t claim any tax relief perfect so my clients wanted there bought it I think the operating costs for the local council what every local council is always being looked at and if they saw an opportunity to perhaps outsource it they might have done so I don’t know if that was the case or not but it worked out well so they took over the running closed it down claimed the tax relief and then they set about converting it into residential units of which they could claim some of that as well so fantastic fantastic opportunity there and very tax efficient as well as

you can see but interesting then there’s an awful lot of these empty X Council buildings that are available so that’s Sur plant and machinery allowances some examples on their flat conversion allowance have a guess well that’s an allowance for mmm yeah it’s one of those what was the name of that company with the tin do whatever it’s called one sale was it it does exactly what it says on the tear on the tin if you convert a premises into flats you’re entitled to flat conversion allowance now I’m kind of giving on one hand here and taken away with another because the whole point of today is to give you this information and so you can go away and you can say oh yes this might be relevant to me and it might be the case that if you’re looking at a particular deal or looking at particular investment though there’s something that may sway the decision if there’s some additional benefits on there something doesn’t quite stack up but you know you can get a massive tax relief or rebate it could make it it could make a difference so this is flat conversion allowance now this was introduced by the revenue to encourage investors to use space that’s already there so rather than buying a plot of land and building a whole new building there’s so much space that isn’t being used and we’ve all seen these rows and rows of shops but they’ve got empty storage above and empty flats above loads of them everywhere and this is what this was designed to do if you as an investor as a developer buy these properties as long as you meet these rules here which but it’s really not that difficult so as you meet these rules you’re entitled to claim 100% of your costs in converting the dead space into livable space as tax deductions so you’re going to treat it as capital right because you’re improving the property so it’ll go against your capital gains tax should you sell it in the future but you can also claim all of that against your taxable income as flat conversion allowance and that’s the incentive the revenue gives you here to say okay use the dead space don’t build new buildings use the dead space you get the tax relief for it so there’s a few caveats and rules but under Section 393 as long as all or most of the ground floor is authorized for business use then it qualifies authorized doesn’t necessarily mean it has to be training and as our the example I’ll show you in a second demonstrates that it has to be no more than four stories above the ground floor and it has to be built before 1980 originally primarily the store the stories above used as dwellings the upper floors have to be unoccupied there for a year and there’s one really funny one what is it so here so but if anybody’s ever seen a flat like this so each flat has to has no more than four rooms ignoring kitchens bathrooms closets and hallways so I guess we’ve got I don’t know three or four bedroom flats or something and they’re not led to a person connected with the the conversion it ends unfortunately in about three months time so you might have already started or perhaps looked at a project or actually done this and in which case you’ve been title to some tax relief a really good tax relief and perhaps if you’d known about it two or three years ago then they might have been more relevant but nevertheless it’s out there and they might they might bring it alive again so here’s some examples here’s the my client of impressed and again this used to be a pub they used to be called the Darby in I think it was up in Preston have a look at it there’s some really nice old pictures really quite a bad I wouldn’t recommend going drinking there when it was the Darby in before again because it’s really not very good but what he’s done is he’s converted it into flats net herbal flats and I think six or seven extended it round the back as well and what is done is the bottom floor half of it he’s advertised it as offices and so they’re kitted out for offices they got some five and emergency lighting and this sort of thing and his left in the way hasn’t met them as offices but his plan is is that he will advertise them as offices and then if it doesn’t work out then he can easily convert them back into residential units but this meets all the requirements for him to claim flat conversion allowance on the property and he spent by you can see from the purchase and development costs he spent a lot of money doing it you can use half the building there but nevertheless very valuable a very good tax relief for him on that so that was that was this one in a very similar situation with a pub I get pubs a pubs are great for this sort of thing and there’s so many of them empty around right was the what now at ten closing a week or 50 a week

or something ridiculous great opportunities there this was quite a while ago down in London my client did exactly the same thing converted the upper floors extended them for residential flats let them outs left at least 50% of the ground-floor metaball for offices because of all that he met the conditions for flat conversion allowance and could claim that tax relief who likes a bit of flat conversion allowance yes we do yes an interesting question those who didn’t here what happens if here goes for Polly permission and converts it back well here’s a thing my wife always tells me off the carnac going around the house is to tell her answer a particular question but bear with me on this one now who’s read the capital ounces Act 2001 yeah I know we all have it’s dead exciting I know but in it it goes on there’s a section on there that says about you have to have an interest in a property look guess what they’re never defined one interest in the property is so 10 a few years ago but basically on this particular case you have to have an interest in that property for at least 7 years so that means that if the owner sells the property before 7 years then there would be potentially some clawback of this flat conversion allowance likewise if the property didn’t qualify for flat conversion allowances by converting the offices back into residential then there would be a clawback for some of that as well so in answer to your question there would be a callback of the tax relief however you could take the approach that are the revenue going to knock on your door and have a look at your property and see if there’s office is there chances are they probably won’t however my sort of view is if you’re benefiting from this tax relief which is a massive tax relief and you can get people who are going to rent the offices out you we get as good rental income from the offices as you would residential perhaps not quite but it satisfies the need for for the tax relief but if they were to convert them back there would be a partial clawback of the tax relief there so BPR a building around these renovations allowance there you go I say trips off the tongue that one does this is a this is really interesting and really relevant this is one of the very few tax reliefs that the revenue looked at and said while this is a good idea I’m glad we came up with this one let’s let’s keep it for the next five years so this is available at the moment until April 2017 what this is derelict or unused commercial properties bringing them back into use now it might not necessarily be available for you as investors or particularly your particular types of properties you’re investing in however there’s some really quite interesting schemes that are going up it relates to how shall I put it underprivileged areas these enterprise zones that are the government have popped up 21 of them I think there are now around the country to encourage investments into those particular areas and we’re working with one particular case in Margate I was just about to say Ramsgate thinking I always get the two mixed up but in Margate look at this place others good doesn’t it that looks nice I went to see some people down there and I went onto Google and I said right okay find me a nice hotel in Margate and you know what the answer was – no the nearest one they found South End which is a for those who good at geography nowhere near Margate so I thought that’s really not very good so I drove down in the morning it was very early I think I’ve got to put I’ll pass for something airy got there met them for breakfast and they said we’re going to buy this building and they’ve already bought it from the local council no tax issues so they can claim the capital ounces they’re going to use the B PRA scheme as kind of an investment incentive for people to invest into this particular project of theirs it’s just purely food for example this is going to cost over three million pounds the capital allowances it’s going to be almost as much as that so the people who buy into this partnership is it’s going to be structured can benefit from massive tax relief purely because they’re taking advantage of this BPR a scheme and it’s something that applies to the particular areas I had a list of all the B PRA sorry that all the Enterprise Zones I’m not sure there’s any too near here but effectively

effectively what this is is this going to be structured in a partnership so people will invest in the partnership get the tax relief based on the B PRA and their structured it in such a way that you’re in for seven years they’ll guarantee a return per year there’s numbers that you can all look at at some point if you’re interested and and the out and there’s a buyout at the end of it as well so that’s that land remediation relief now land remediation relief that sounds really dull doesn’t it again the revenue is very good at this sort of thing they talk about land and what they actually mean yeah is land and buildings but of course how are you supposed to determine that from land remediation relief but it relates to any cleaning up of contamination on land and buildings that you can that you undertake it has to be done by a company but it is the biggest single tax relief the revenue offer at one hundred and fifty percent so if you buy a building that’s got asbestos is a prime example or even if there’s elevated levels of arsenic or radon or whatever it might be and you have to remediate it you have to clean it up you’re entitled to claim one hundred and fifty percent of those costs against your taxable profits who here knows what a petrol station looks like yeah you have to raise your hands I assume that your would you’ve seen these these cleaners who take over these petrol stations prime opportunity you also please see people who buy up old petrol stations and clear them out and build houses why are they buying those old petrol stations well one of the reasons I’m sure it’s not the commercial decision behind doing it but they are contaminated as well as building the houses and selling them off for a profit and what have you any money they spend taking the oil out the grounds the tanks anything they spend they can claim one hundred and fifty percent against taxable profits and if you’re spending fifty thousand pounds cleaning up that land that’s seventy five thousand pounds profit you can make before you even start playing tax interesting little thing there but one of the great things about this I think it only applies to this and R&D tax credits we love an R&D tax credit if you if you make a loss you can actually surrender that loss to the revenue and get cash back instead who loves cash back from the revenue oh I get so excited about that I’m glad you can tell at the moment though so if your if your company makes a loss by claiming this land remediation relief you can phone at mr. revenue and say hello mr revenue I want to surrender my loss can I get the money back on the tax that that’s that loss that I would have paid and it’ll send you a check for that something for you to be to be mindful of of course you can and I’ve got a property and you’ve actually done the capital allowance on it and for me but I had a leak in the border house and when they came to clean up they said oh there’s asbestos and so I’m going to have to spend a thousand fifteen hundred get me cleaned up can I claim that under la la la it has to be claimed by company so if you have it in the company name then you can do that you have to get a reports or some confirmation that there is a special survey level that you have to identify all the costs you’ve incurred related to it yeah in which case is very easy to put together the information and do that so there you go land remediation relief excellence and here’s an example of this clients of ours with a big Factory in Nottingham I shan’t tell you what he makes but it’s a quite interesting quite interesting business and yeah obviously a lot of these old factories there’s asbestos everywhere they’ve had a asbestos survey came in and they had to do the work anyway but it was a bonus that they they could then claim the land remediation relief and that by saved him six thousand pounds off his office tax bill considering that he spent eighteen thousand pounds on the work well that’s the third of it back so if you look at it that way it’s it’s good enhanced capital ounces yeah let’s have a guess well these are about these are capital ounces that have been enhanced somehow other types of plant and machinery there’s a great big long list of them on the revenues the revenues website the ECA in Harts capital allowances go Vuk I’m sure you’ve all been there but if you’re investing in assets investing in new boilers all these sorts of things just have a look at this website is free you can go there and it basically lists two types of enhanced capital allowances

one it lists things which are mass-produced things that are every day so if you’re going to buy a boiler which costs four thousand pounds and on the list on this list here there’ll be another boiler which meets the revenues own guidance when it comes to energy efficient boilers that’s 1,100 pounds well you might want to consider buying the more expensive one so then make sure you get the enhanced capital allowances rather than nothing at all and that’s something that there’s loads more information on that particular website about that but that’s one thing where it’s all mass-produced items which are very clear and manufacturers now are generating more more energy efficient plants in order that you will then hello but you will then buy their item over one that doesn’t qualify and therefore that’s their incentive and the revenue give this tax relief to meet their carbon footprint agreement yes sir oh sorry and if you aim incurring that expenditure through your company to replace that equipment can you still claim that as a personal tax relief if you’re the legal owner of that asset is the one that can claim the tax relief so if your company is the one that bought it and owns that particular asset your company is the one that could benefit from it so it becomes a corporation takes the – exactly so yeah of course presumably if the boiler that you bought was a replacement for a similar boiler yeah and it’s already assumed by your accountant to be a replacement exactly claiming a normal tax relief an expense you can’t claim it twice through a capital o scan your perfectly correct yeah whatever you don’t claim it twice no whenever your one of your one of your buying something you would first need to determine if it’s a capital addition and improvement your property or if it’s a replacement and again the clues kind of in the in the name here it has to be a capital allowance so as you already said if you’re just replacing a boiler like for like and there’s no improvement then of course it would be written off against your profits and that particular year as an operating expense but if it is an improvement if it’s a new build or development and it’s a new asset then it is a capital asset in which case you’re entitled to claim that but thank you for the question so there are enhanced capital allowances so they form a long list of all these things just going to have the look at the website I’ll warn you it’s not that exciting but there’s lots of information on there there’s a list of all these technologies and also there’s items which aren’t on the list how are you supposed to know what’s not on the list well these are things that aren’t on the list are things that are will be big bespoke projects where you have to get them certified so for example if you were installing a combined heat and power solution because each one is designed for that particular building you could still claim that but you would have to make with your measurements and go to the ECA with your documentation and they would have to certify it and then it would qualify but so that’s only for a really big one off yeah if it’s on the list and they qualifies it is literally a list of the manufacturers and the the Mike model of that particular asset and if you bought a boil over it says potterson boiler number one two three four and is on that list then it qualifies but if it’s not on that list it won’t qualify but have a look at the solar installations so pooling so a few more things before we get onto the really exciting bit so from April 2012 the revenue introduced certain rules around buying and selling of properties with capital allowances in mind and this section 198 election that I mentioned and what they’re doing is from April 2014 there’s some walls where you can’t actually buy property unless a capital allowances exercise has been done on the premises otherwise you could potentially lose out and get nothing at all so just be aware any properties you buy from next April I keep thinking it’s 2012 any properties you buy from next April capital allowances will be a bigger part of it so just an example of a missed opportunities I’ll go back to this capital allowances section 198 a client of ours bought and I’ll be in cue site up in Yorkshire 45.6 million pounds yeah that’s a lot of money they didn’t even really concentrate on the contract too much they left it to this list as their green a price but in the contracts it said that the in the purchase agreement the election for plant and machinery was set at 1 pound so how much tax relief could

they claim on that particular purchase 1 pound and we estimated they could have claimed about 1.6 million pounds so you know it was their loss yes I have a little experience with vistas on the commercial property solicitor though he’s not my area but just to warn people that some then doors deliberately do that because some of them can reclaim it and so they’ll say that a pound so they keep all of the allowances whereas you should be able to negotiate some portion between veteran purchaser so if this is of concern then make sure your ancestors who know what they’re doing and can negotiate it properly for you it sounds like you’re just the person for that as well but this this you’re exactly right and this goes back to the pooling issue that comes into force in April next year because it is such a big thing and because the plants machinery value is sometimes a point for negotiation whereby I’ve had it recently just in the last weeks a client of mine was buying a property in Leicester and the previous owners could claim some capital allowances but it wasn’t very much and that was a negotiation on the price to transfer those allowances over but there’s some missed opportunity so some quirky allowance it’s just a few things to to cover you up with now I want to show of hands very quickly who enjoys a caravan holiday yes don’t be shy come on I don’t know there’s more of you out there caravans are deemed to be items of plant and machinery if they meet certain certain rules there’s some rules there it has to be it has to be on an authorised caravan site and it has to have normal trade usage but the caravan in its entirety is an item of plant and machinery as well as that no word of a lie this next item is a night the plants and machinery look at that I was choosing this picture and I said to my wife let’s get a big angry sheepdog like that she said no get like that and all the women will go on but she was right as usual but I died I don’t don’t tell her that so sheepdog is an item of plant and machinery as long as it lives more than two years of course if it lives less than two years you don’t get the tax relief it says sheep and horses and cows aren’t capital ounces because that will be ridiculous right of course unless it’s a working horse or what not but there you go so sheep dogs so next when you come to the pop quiz on Sunday and they’re talking about sheep dogs as planted machinery you know the answer thank you very much for your time everybody I should be around for the forseeable thank you

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