Capital Allowances: The Overlooked Opportunity in Commercial Property

When it comes to reducing tax liabilities on commercial property spend, Capital Allowances remain one of the most underutilised tools available to accountants and their clients. At Momentum Tax Group, we’ve seen time and again how accountants, through no fault of their own, miss out on substantial tax relief simply because they aren’t provided the detailed information to properly allocate the spend.

What Are Capital Allowances?

Capital Allowances are a form of tax relief available to any UK or Irish taxpayer who incurs capital expenditure, however, if your clients:

• Purchase a commercial property
• Refurbish or extend existing commercial premises
• Build new commercial premises
• (In some cases, certain types of residential property also qualify)

They may be missing out on significant allowances that allow you to deduct qualifying expenditure from their taxable profits, reducing future tax liabilities and even triggering refunds for tax already paid.

Who Qualifies?

The key qualifying criteria include:

• The claimant must be a UK/NI/ROI taxpayer
• The property must be used for business purposes (not held in a pension fund or by a developer)
• The claimant can be the property owner or a tenant, as long as they’ve incurred the capital expenditure

What’s Commonly Missed?

Despite their value, additional allowances are often overlooked for several reasons:

1. Embedded Assets Within Structures

Much of what qualifies is hidden in plain sight, within the building itself. This includes items like:

• Mechanical & electrical systems
• Heating and ventilation
• Fire alarms and emergency lighting
• Sanitary ware and floor finishes
• AND Much More

Without specialist knowledge, these embedded items are easy to miss.

2. Complexity of Assessment

Identifying qualifying assets requires a mix of tax, quantity surveying, and engineering expertise. It’s not something that can be picked up through standard bookkeeping or tax software.

3. It’s Outside Routine Tax Returns

Capital Allowances assessments are rarely included in year-end compliance work. Often, no analysis has ever been carried out, even for longstanding commercial properties.

Real-World Impact

Take a commercial building purchased for £500,000. It’s not unusual for £150,000 of that to qualify for additional allowances. That could translate into a tax saving of:

• £37,500 for a limited company (25% corporation tax) (ROI is €18,750 [12.5%] for owner occupier OR €56,250 [37.5%] owner rented out)
• £60,000 for an individual (40% income tax) (ROI is the same %)

These are not theoretical savings, they are real, tangible reductions in tax.

Why Accountants Partner with Momentum

Embedded Capital Allowances are a niche within tax that require a deep, technical approach utilising the expertise of a Chartered Surveyor. That’s where Momentum adds significant value. We work alongside accountants and business owners to strengthen client outcomes and protect against HMRC and Irish Revenue scrutiny.

Here’s what we bring to the table:

• Free preliminary reviews to identify entitlement
• Audit-ready reports with full supporting technical & financial analysis
• Specialist expertise that complements your compliance work
• Performance-aligned fee structure that underlines benefit delivered

Final Thoughts

If your client has bought, sold or refurbished a commercial property, and you believe the Capital Allowances haven’t been fully considered, there’s a high chance there is significant tax relief yet to be utilised. Let’s fix that. Get in touch for a no-obligation discussion, or a simple, no-obligation desktop review to optimise the true tax value in your clients’ property portfolios.

Let’s talk about how we can work together to deliver better results, with confidence.

If you'd like a no-obligation review or just a second opinion on your tax incentive claims, contact Momentum Tax Group on Head Office +44 (0) 28 9140 4030 / Dublin +353 (0)1 265 4090 or email tax@momentumtaxgroup.com