How Healthcare property owners can save tax
- Purchasers and owners of commercial property including surgeries, labs and other healthcare venues have an unusual chance to save significant amounts of tax in a way that is encouraged by government.
- Current owners and potential purchasers should seek expert advice quickly to secure the value hidden in a property – which can be lost if no action is taken.
How Does It Work?
It is a form of tax relief called “Capital allowances” which you may have come across if you or your business has bought dental chairs, an X-Ray machine or even a computer system. They are one of the few forms of tax planning actively encouraged by the government and help businesses invest in growth. These Allowances are also available for larger sums spent within commercial property. This expenditure can include elements the purchasing, refurbishment or refitting of a property, or extending an existing property.
How does claiming capital allowances work for property?
The two main types of capital allowance that we are interested in are for items we can define as either “plant and machinery” or “integral features”.
Plant and machinery assets are items that turn the bare walls of a building into somewhere that can operate a business or “trade”. Examples of plant and machinery include sanitary ware, central heating and passive ventilation, CCTV, fire detectors and even door closers.
Integral features are larger systems within a building such as electrical and water supplies, lifts and heating or cooling installations.
A capital allowances claim brings the values of all these individual items together and gives a total number which an Accountant can then use to reduce tax.
A Bristol Dentist purchased her practice freehold for £205,000 and by claiming capital allowances was rebated £42,000 of tax which she then used to fully refurbish one of the surgeries – expenditure which then qualified for further capital allowances…
Capital allowances – Changing Times
Most capital allowance claims are carried out on property that was bought at some point in the past and the good news is that any property purchased before April 2014 can be assessed at any time for a claim.
The recent change is that from 1 April 2014, a purchaser has no right to claim capital allowances when they buy. Capital allowances may still exist within the property, but the purchaser will need to work with a specialist to secure agreement and the benefit from the vendor – something most accountants and solicitors need help to achieve.
If this is not done, then capital allowances cannot be claimed by the buyer or any future buyer of the property.
Summary
- Buyers and owners of Healthcare property have an opportunity to save significant amounts of tax in a way that is encouraged by government.
- Owners who acquired before April 2014 are able to claim at any time.
- Current and future buyers should seek expert advice to secure the value in the transaction
- Lily Head Practice Sales work with a team of consultants who have carried out nearly seven hundred claims in this field and are proud to stand by the value they have added to their clients
- Clients of Lily Head can enjoy a FREE capital allowances assessment to see if a property would qualify (almost all do…)
If you would like to discuss anything in this article or anything to do with buying, selling or financing a dental practice please Contact Us today.
