26 commercial propertyBusMagAdvert-artwork:Layout 1 09/09/2011 10:54 Page 1 Commercial Property Law
“We aim to close the deal as fast as possible to ensure the best commercial outcome for you”
John Newton, Partner, Commercial Property
john.newton@
lamportbassitt.co.uk
Are you maximising your capital allowances?
In the current economic climate, where cashflow is key, I am often asked about maximising capital allowances, writes Andrew Alder of RSM Tenon. Making such claims can go a long way to boosting cashflow for individuals and companies
The benefits of looking into capital allowance claims on commercial property can make significant savings which can be reinvested back into the business or potentially withdrawn by the shareholders or owners.
There is currently no time limit on making a claim for allowances that are integral to a building. However, it is anticipated that legislation will be introduced in March 2012 that will limit the number of years businesses can go back and claim. The proposal is that an election will have to be made within two years of incurring any expenditure.
So if a business already owns a property and it has not checked the capital allowances position, it may miss the opportunity to claim once the legislation changes. My advice would be to act now before it is too late.
What are capital allowances?
Capital allowances are a statutory tax relief that can reduce the tax that businesses have to pay on their annual profits. However, I have found that businesses often fail to utilise this relief.
Businesses generally do not think of the tax issues arising following the purchase or refurbishment of a commercial building. Other issues such as physically moving, last minute legal issues, integrating staff and ensuring the smooth running of the business, are seen as a priority.
There is a common misconception that tax relief is only available on the ultimate disposal of a building and not on its construction or purchase. As a consequence many businesses often end up paying more tax and missing out on the cashflow benefit.
When acquiring a building or undertaking a refurbishment (whether new or secondhand) careful analysis of the expenditure can identify items qualifying for tax relief which is given by writing off their cost over a period of time (capital allowances).
The relief available on qualifying items range from 8% to 100% depending on the nature of the item identified. For example, the annual investment allowance can provide immediate relief of up to £100,000 (reducing to £25,000 from April 2012) on qualifying assets. In other cases, tax relief is spread over a number of years which provides a cashflow
Solent Corridor beats annual average
Latest figures from regional real estate adviser Hughes Ellard show that there have been 350,000 sq ft of office transactions to date this year in the Solent Corridor in Hampshire.
The total let or sold along the M27 between Southampton and Portsmouth is 100,000 sq ft more than the annual average for the corridor. Of the total space, Hughes Ellard, which has offices in Southampton and Fareham, has been effective in a record half of the deals.
Russell Mogridge, business space director at Hughes Ellard, said: ”It has been a buoyant year so far for the sector, with 350,000 sq ft of office transactions on the Solent Corridor, of which we have been involved in 50% of the activity.
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The total is 100,000 sq ft more than the average for the corridor. Most activity has been at the eastern side of the M27, namely at Solent Business Park at Whiteley and 1000 Lakeside in North Harbour, Portsmouth.”
Notable transactions include 100,000 sq ft let at 1000 Lakeside in the past quarter, including latest occupier The Southern Co-operative. The supermarket and funeral care chain signed a 15- year full repairing and insuring lease on 17,150 sq ft, for an undisclosed rent, with Hughes Ellard and joint agent Vail Williams representing landlord Highcross.
At Solent Business Park, one of the latest major occupiers is global healthcare products provider
benefit by reducing tax payments, or by increasing trading losses that can be offset against future tax liabilities.
The cash saving to a business is dependent upon the classification of the assets which are identified as qualifying for capital allowances and also the rate at which the business pays tax. Relief for a sole trader or partnership can therefore be as much as 52% and for a company up to 27.5%.
I would urge all businesses with commercial property to seek professional advice now before a change in the legislation.
Details for RSM Tenon Offices
Southampton: 023-8064-6464 Basingstoke: 01256-312312 Bournemouth: 01202-204780 Portsmouth: 023-9265-8331
Lamport Bassitt Solicitors
www.lamportbassitt.co.uk
Covidien, which is listed on the New York Stock Exchange and has leased the first and second floors at Four500 Parkway, totalling 36,594 sq ft.
Mogridge added: ”Current office trends are showing the professional service sectors are expanding with the likes of recruitment and legal services, with a preference for single floor plates, improving communication and staff morale with a team atmosphere through open-plan working.”
Nik Cox, director, based at Hughes Ellard’s office in Southampton, continued: ”This is good news, although we are yet to see take-up levels on the western side of the M27, including Southampton, improve. However, we are seeing the beginnings of renewed interest and it may well catch up with the eastern side by the end of the year.”
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – OCTOBER 2011
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