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£72m in tax relief to be lost on 4,000 approved office conversions

If the 4000 office-to-residential conversions that were given the green light between April 2014 and June 2015 go ahead, the owners could lose an estimated £72m in unused capital allowances tax relief, according to research by Catax Solutions.

The firm has warned that the lack of understanding surrounding capital allowances will see the value of lost tax relief rise even further, following the announcement by Housing and Planning Minister Brandon Lewis that permitted development rights (PDR) will now be made permanent in an effort to boost housing supply.

Mark Tighe, MD at Catax Solutions, commented: “Capital allowances can be complex, so it’s important the message here is a simple one: if you are considering converting a commercial property into a residential one, or selling it onto a residential developer, then you need to make a capital allowances claim before or at the point of sale or before work begins. If you don’t, you will instantly lose potentially tens or even hundreds of thousands of pounds of tax relief.

“Given the current housing shortfall, relaxing the planning rules to allow more office-to-resi conversions make sense but it doesn’t make sense for commercial property owners to not receive the tax relief that is their right by law. But if they rush into converting property without making a claim, this is exactly what could happen.”

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