Whether acquiring a hotel, restaurant or other commercial premises, buildings used by hospitality businesses are abundant with machinery and installations. This can have a great effect on capital allowances – a form of tax relief for commercial property owners which can be utilised to minimise overall tax paid. Assets included could be lifts, lighting systems, air-conditioning, fire alarms and CCTV systems.
On the initial viewing of a premises it is important to ascertain what plant and machinery and integral features, if any, are included within the property. When making an offer to purchase the property ensure that enquiries are made of the seller to see what features have been treated as capital allowances items and either held within the seller’s “main” pool or “special rate” pool. A value can then be attributed to these items within the purchase price offered. Provided that the seller has pooled all relevant items and further provided that a capital allowances election is signed by both parties on completion of the sale, then the value of these items can be used in your tax computations to claim tax write down allowances.