Capital Allowances

Capital Allowances

What Are Capital Allowances?

Capital allowances are a valuable form of tax relief that allow commercial property owners and occupiers to deduct qualifying capital expenditure - such as buildings, embedded fixtures, and operational equipment-from their taxable profits.

If your business has invested in buying, renovating, or fitting out a commercial property, or in plant and machinery, you may be entitled to significant tax savings in the form of capital allowances.

Why Are Capital Allowances Important?

Capital allowances provide crucial benefits to SMEs, including:

• Reducing tax bills
• Improving cash flow
• Boosting the return on property and equipment investments

Despite this, many businesses don’t claim the full relief they’re entitled to - simply because capital allowances can be a complex and specialist area.

Capital Allowances Can Be Complex

Identifying what qualifies, assessing how it should be categorised, and applying the correct type of allowance to each item requires deep technical expertise. Common questions include:

• Which elements of a building or refurbishment qualify?
• How should embedded items like heating, lighting, or ventilation be treated?
• What’s the correct tax treatment for each type of expenditure?

These aren’t always straightforward-especially when it comes to embedded capital allowances, which are often overlooked. These include essential building elements such as:

• Electrical and lighting systems
• Air conditioning and ventilation
• Security and alarm systems
• Kitchens, bathrooms, and plumbing
• Lifts and specialist machinery

Although commonly treated as part of the structure, these items can in fact qualify for higher levels of allowances than the Structures and Buildings Allowance (SBA) which would otherwise be the default treatment - making them eligible for relief in the form of capital allowances. But without expert identification, they’re frequently missed from standard claims.

Getting it wrong doesn’t just mean missing out. Over claiming can trigger an HMRC enquiry, which could lead to delays, repayment of relief, and even financial penalties.

How Lumina Can Help

At Lumina - Specialist Services by Ad Valorem, we help SMEs uncover and claim the full tax relief available on their commercial property and equipment investments.

Our capital allowances specialists make the complex simple. We ensure your claims are thorough, compliant, and fully optimised - with minimal disruption to your business.

We take the time to understand your operations, speak with your internal team -such as those involved in property development or facilities management - and assess the full scope of qualifying expenditure, from bricks and mortar to integral equipment.

We offer:

• Specialist reviews of property purchases and refurbishments
• On-site asset identification
• Clear, HMRC-compliant reporting
• Support with both new and retrospective claims
• Seamless coordination with your accountant or finance team