CASE STUDIES

RESIDENTIAL

Capital allowances are not available on a dwellings used in property business (CAA2001 s35), but this does not prevent allowances being claimed on two different classes of residential property investment.

Firstly, HMRC’s definition of a dwelling does not include the common parts of a residential building. It is accepted practice to claim Plant and Machinery Allowances (PMA) in the common corridors, lobby, basement car parks etc of a block of flats.  For example, this could include the lift installations, lighting, heating and security systems to these areas. 

 

Secondly, you can claim Plant and Machinery Allowances (PMA) within a qualifying Furnished Holiday Letting (FHL). What qualifies as a FHL is well defined, but includes properties both in the UK and the European Economic Area (EEA).  It is important to remember that any allowances can only be used in the separate UK or EEA FHL trade and cannot be claimed in a wider ordinary property business. 

 

It is common to acquire a FHL from a private householder who lived in the property.  This means that the vendor was not entitled to claim PMA and a full, unrestricted CAA2001 s562 apportionment of the price paid may be possible.  

 

IMH Advisory LLP advises a number of private and corporate investors in this sector.

 

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