What capital allowances can I claim in my property rental business? Property rental business owners can claim a diverse range of capital allowances.
Subscribers click here for your detailed version of this guide.
This is a freeview summary of those allowances with links to more detailed guidance.
At a glance
Commercial property
Capital Allowances may be claimed on non-residential let properties:
- The Annual Investment Allowance or Writing Down Allowance may be claimed on qualifying plant and machinery.
- From 1 April 2023 the AIA limit is permanently set at £1 million.
- The owner of a commercial property may be able to claim allowances on capital expenditure incurred by the previous owners provided that it was pooled by the seller, see Fixtures overview.
- Corporate landlords may benefit from Full Expensing, this replaces the Super-deduction and SR allowance which ended on 31 March 2023.
- The Structures & Buildings allowance is only worth 3% available for companies' expenditure incurred on or after 29 October 2018.
Residential letting of property
Claims for capital allowances can be limited for certain types of residential lettings businesses.
- Plant and Machinery allowances cannot be claimed in respect of plant or machinery used in a Dwelling house.
- Furnished Holiday Letting (FHL) is treated as a trade for Income Tax and not as 'ordinary property letting': the dwelling house capital allowance restriction does not apply to qualifying FHLs.
- Landlords of furnished and unfurnished properties may claim Replacement of Domestic Items Relief instead of capital allowances.
- A landlord can also claim capital allowances on the cost of office furniture and equipment, including motor vehicles used in their own business, as a landlord, see Landlords: Capital allowances.
Choice of accounting basis
Claims for capital allowances are restricted for small property businesses who have not opted out of the Cash Basis, and claims may be restricted if fixed rate expenses are claimed too, see Accounting: Cash basis /fixed rate expenses?
Index to key guides
| Guide | Details |
|
What is the Annual Investment Allowance? What are the limits? What expenditure qualifies? |
|
| Dwelling Houses & capital allowances |
What is a dwelling house for capital allowance purposes? Can capital allowances be claimed in respect of a dwelling house? What expenditure qualifies? |
| Enhanced Capital Allowances: energy saving plant |
What are Enhanced Capital Allowances (ECAs)? What is energy-saving plant and machinery? What allowances are available? |
| Enterprise Zones: plant and machinery allowances |
What is an Enterprise Zone (EZ)? Enterprise Zones (EZ) are designed to attract new business to their area by offering a package of measures from capital allowances and business rate relief to planning relaxations. |
| What are fixtures? How do I claim lost or unclaimed fixtures? When must fixtures be pooled? | |
| Integral features: At a glance | What is an integral feature? |
| Plant & Machinery allowances | What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities? |
| Replacement of domestic items relief | What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met? |
| What is full expensing? When does it apply and what is the rate of allowance? How are disposals of full expensing assets dealt with? What assets qualify for the 50% First Year Allowance (FYA)? How do I deal with disposals of 50% FYA assets? How do I make a claim? | |
| Super-deduction & First-Year Allowances | The Super-deduction is no longer available for A/P commencing 1 April 2024. It is a 130% and a 50% first-year allowance for plant and machinery expenditure incurred by companies between 1 April 2021 and 31 March 2023. |
| Structures & Building Allowance (SBA) |
Provides relief for capital expenditure on non-residential structures and buildings brought into use for qualifying activities. |
| Wear and tear allowance and renewals basis |
These were withdrawn from April 2016. Residential property letting businesses are unable to claim plant and machinery allowances, and these provided an alternative form of relief. Wear and tear allowance was only available to landlords of furnished properties. |
Are you enjoying our content?
Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.
Register with us now to receive our receive our FREE SME Topical Tax Update & newletter
