When businesses or landlords acquire commercial properties, they often overlook a valuable tax-saving opportunity — capital allowances. A capital allowances survey helps identify qualifying expenditures that can be offset against taxable profits, leading to substantial tax relief. This guide walks you through each stage of a capital allowances survey.
What Are Capital Allowances?
Capital allowances are a form of tax relief provided by HM Revenue & Customs (HMRC) for certain types of capital expenditure. They allow businesses to reduce their taxable profits by claiming deductions on qualifying assets within a commercial property. These include:
- Plant and machinery (e.g., heating systems, lifts, air conditioning)
- Fixtures and fittings (e.g., lighting, kitchens, carpets)
- Integral features (e.g., electrical systems, plumbing, fire alarms)
- Renovations and refurbishments
A capital allowances survey is the process of identifying and valuing these assets to maximise tax savings.
How a Capital Allowances Survey Works
1. Initial Assessment
The process begins with an initial review of your property and financial records. This includes:
- Identifying whether the property qualifies for capital allowances
- Reviewing purchase contracts, invoices, and previous tax claims
- Assessing ownership structure and past claims history
This stage helps determine whether a full capital allowances survey is necessary.
2. Site Inspection
Our specialist capital allowances surveyor will visit the property to conduct a detailed inspection. The purpose is to:
- Identify qualifying assets embedded within the building
- Assess plant and machinery that may not be itemised in previous records
- Capture evidence (photographs, measurements, asset listings)
Many capital allowances remain unclaimed because they are hidden within the property structure. A thorough site survey ensures nothing is overlooked.
3. Valuation & Analysis
Once the survey is complete, the gathered data is analysed to determine the value of qualifying assets. This involves:
- Reviewing construction costs, refurbishment expenses, and purchase costs
- Allocating values to different categories of qualifying assets
- Ensuring compliance with HMRC guidelines
This stage often involves expert knowledge in capital allowances, quantity surveying, and property valuation to maximise claims within legal parameters.
4. Preparing the Capital Allowances Report
A detailed Capital Allowances Illustration is then compiled, which includes:
- A breakdown of identified qualifying expenditures
- The total value of allowable claims
- References to relevant tax legislation and case law
- Justifications for each allowance claim
This report is a crucial document that supports the claim when submitted to HMRC.
5. Claim Submission & HMRC Compliance
The final step is submitting the claim as part of the business’s corporation tax return or self-assessment tax return. The capital allowances can then be applied against taxable profits, leading to potential tax refunds or reduced future tax liabilities.
HMRC may review the claim, but with a well-prepared report backed by professional advice, most claims are processed smoothly.
Why a Capital Allowances Survey Is Essential
Without a professional capital allowances survey, businesses often miss out on substantial tax relief. Some key benefits include:
✅ Increased Cash Flow – By reducing tax liabilities, businesses can reinvest savings into growth.
✅ Retrospective Claims – In many cases, claims can be made on past purchases (up to two years after filing tax returns).
✅ Compliance & Risk Reduction – A professional survey ensures claims align with HMRC rules, minimising audit risks.
Who Can Benefit from a Capital Allowances Survey?
A capital allowances survey is beneficial for:
🏢 Commercial property owners – Office buildings, warehouses, retail spaces, hotels, etc.
🏗️ Property investors & landlords – Those who acquire commercial properties.
🏨 Hospitality & healthcare businesses – Hotels, restaurants, care homes, hospitals.
🔧 Manufacturers & industrial firms – Factories, workshops, and industrial units.
Whether you own a property or lease one, you may be entitled to claim capital allowances, making a survey a worthwhile investment.
Final Thoughts
A capital allowances survey in the UK is a highly effective way to unlock hidden tax savings within a commercial property. While the process may seem complex, working with a specialist ensures businesses maximise their claims, stay compliant, and benefit from significant tax relief.
If you own or are purchasing a commercial property, consider arranging a capital allowances survey—you might be sitting on a substantial tax-saving opportunity without realising it!
