Charities and capital allowances on fixtures

When a charity acquires or sells property, capital allowances on fixtures are often forgotten or ignored as the charity is considered ‘tax exempt’ in most instances, and therefore cannot directly benefit from these allowances.

However, since the introduction of the pooling requirement for fixtures back in April 2014, it is important for charities to give some thought to the position when negotiating the purchase price of a property, as any available allowances may help to make the property more attractive to a future purchaser.

The two ways of securing future allowances are through a s198 election (if it can be agreed between the charity and the vendor), or otherwise a future purchaser will need a written statement from the owner prior to the charity and this may be difficult to obtain.  Timing is important for both of these.

It is also important for a charity to maintain records of any expenditure it incurs on the property that may qualify for capital allowances as although they generally don’t claim, a future purchaser could benefit from these.

If you are a charity and are looking at buying or selling a property and would like assistance with your capital allowances, please get in touch.

Comment

Michael Godfrey

Assistant Director, Business Tax
I joined the Business Tax department in June 200, which supports the Audit and Accounts department by providing corporation tax compliance and advisory services. We also provide compliance services and a wide range of Business Tax advisory services to our wider client base.

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