Capital allowances can therefore be considered a form of 'tax depreciation', a term more widely used in other tax jurisdictions such as the US.
Further claims can be made on a property where it is extended or re-developed but only on those new elements of plant and machinery fixtures introduced to the building.
The main types of capital allowance are: AIA is claimed for plant and machinery, with some exceptions such as for cars.
WDA applies to such amounts of allowable expenditure that are not relieved by either AIA or FYA.
Capital allowance reliefs can be set against the client's taxable profits reducing the amount payable.
Please note as it is an allowance against taxable profit, you have to be a tax payer to benefit, therefore this does not normally apply to property owned in SIPPS or by charities and trusts.
Allowances are generated when a business client builds or acquires commercial property.
The amount of plant contained within the building or acquired property is the key to maximising the relief.
The claim should be considered as an effective discount and cash contribution to the construction cost or purchase price.