UK commercial property owners lost an estimated £28m in unclaimed tax relief in April, according to capital allowances specialists, Catax Solutions.
Figures from the largest capital allowances company in the UK, Catax Solutions, estimates that only 5% of commercial properties sold since the implementation of the 2012 Finance Bill on 1 April 2014 – that qualified for tax relief – had claimed any of the allowances available to them.
Regulation changes implemented from 1 April onwards means that any individual or business that owns a commercial property has to identify the capital allowances in their commercial property at the point of being bought or sold, or they could be lost forever.
However, Catax Solutions warned that as very few parties involved in commercial property transactions understand the changes to the tax regime, the amount of lost tax relief will continue to grow month on month.
Mark Tighe, managing director of Catax Solutions, said: “As we expected, Britain’s commercial property owners are already losing a staggering amount of tax relief due to the lack of understanding and knowledge of capital allowances. And its extremely worrying to know that £28m is just the start – in just one month.
“This tax relief has now been lost forever. And there is no doubt now that a very large percentage of transactions will continue to take place this year without capital allowances being identified.
“It is also very worrying to know that this loss if just the start of what could be a very messy process. It is only a matter of time before finger pointing begins, and legal action will ensue as more and more property owners are affected by these losses.”
Notes to editor
* £28m calculation based on conservative estimate, with an average property price of £500,000, the calculations would be as follows:
· Purchase value £500,000 x 934 property transactions = £467,000,000 in property
· £467,000,000 x (conservative) 20% Capital Allowances identification = £93,400,000
· Then £93,400,000 x average tax rate of 30% = £28,020,000 of tax relief – this is what it is worth to property owners on an annual basis
** HMRC UK property transactions count April 2014 – 9340 transactions in total
