If your business was to purchase its own building, this is a large investment. In general, unless it is an industrial building, you unfortunately can't claim capital allowances on the building and even then at the rate of only 4% per year. However, when you purchase a building, there's often more to the purchase than just the pure fabric of the building.

Capital allowances are available on plant and machinery that forms part of the property and the rate for capital allowances in the first year on plant and machinery can be as high as 50%, creating a substantial difference in tax relief.

Very often, little thought is given to this and a massive opportunity to reduce tax liabilities is missed.

Exactly what is plant and what is part of the building has been the subject of numerous cases. Examples of items that may qualify as plant and machinery rather than being part of the fabric of the building could include heating systems, lifts, electrical systems, refrigeration equipment, etc.

This is an expert area and even if you have already submitted a return, it is still possible to re-open the case and claim the capital allowances that you should have been entitled to.

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