All commentators agree that the current economic downturn is of a severity not seen for at least a generation. As household names disappear from our high streets, every business that is to survive must maximise income and cut out unnecessary costs. Tax burdens look set to increase over the medium term and any landlord or business paying higher taxes than the law requires is carrying a burden that will be damaging and may even prove fatal.
Capital allowances offer legitimate, yet under-exploited, opportunities to reduce tax liabilities, giving tax breaks for a wide range of capital expenditure. The scheme of tax relief is fully approved by the tax authorities and was even extended in April 2008. As a result, tax savings are now available for many types of everyday expenditure incurred by all businesses, including the costs of ordinary lighting, general electrical works and hot and cold water systems.
Typically, relief is available – if a legitimate claim is made – for about a third of the purchase cost of most commercial buildings (offices, care homes, sports centres, etc.), often reducing tax bills by many thousands of pounds and even turning tax liabilities into repayments.