Capital Allowances

Each year millions of pounds of tax allowances and reliefs go unclaimed.

Tax issues are often overlooked or considered at a late stage in property transactions, but when the full suite of options for tax allowances are used proactively they can secure significant savings from acquisitions, disposals, developments and brown field remediations.

For many tax is a consequence, rather than a strategy. Working alongside our clients to deeply understand their circumstances we leverage tax reliefs to positively shape property strategies; maximising your potential, opportunities and savings across property transactions and developments.

We understand that commercial business drivers will always dominate property development and investment, but if tax allowances and reliefs are used strategically they can significantly enhance returns. Our experience means that we know where to introduce and implement tax allowance strategies for maximum effect.

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Construction claim assessment

Capital Allowances is a technical and specialist activity that requires an optimal blend of knowledge, experience, and attitude.

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Our services are provided by senior advisers that have performed at the highest level across a variety of service platforms. Accounting, surveying and property consultancy experience blends together a considered and mature approach to claim solutions. We assume a thorough approach is required in all client requests but wherever possible we adopt simple, clear and disclosed services.

We believe capital allowances are an essential aspect in any project armoury and an invaluable value engineering tool. The inclusion of capital allowances estimates to project viability, feasibility, and financial modelling studies is paramount to enable our clients to fully consider project scope and returns. Maximising capital allowances then becomes an intrinsic project element, providing confidence to clients, and all stakeholders and interested parties.

Having a range of understanding through plant and machinery allowances, general plant, integral features, super deductions and first year allowances, structure and buildings allowances, contributions, grants, repairs, etc requires a holistic experienced approach to evaluate the best approach required.

Strategic acquisition advice

Our consultants have 20 plus years of advising on large and complex transactions through proactive planning and negotiation.

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Best practice and a high level of understanding underpin capital allowances transaction strategies, whether in selling or buying scenarios. Adopting a bespoke forward-thinking strategy establishes a competitive advantage over the opposing transacting parties, and in this respect capital allowances is no different to client investment and negotiation advice. A little proactive planning using foresight and judgement goes a long way to providing knowledgeable and maximised tax outcomes.

The building fixtures environment has evolved many times over the last 20-30 years, with finally, in the last 5 years at least, HMRC achieving a greater level of control and transparency. Significant opportunities remain however, for both sellers and buyers through an understanding of seller structure and positioning, protection and creative use of allowances both unidentified or identified, or knowing the right information required at the right time out with the standard CPSE enquiries. The key to success is in engaging the right expert early.

Sectorising allowances

All industry sectors are unique but require a tailored and transferable approach of core disciplines.

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Our cross trained senior surveying and tax experts have a unique set of skills which are required to assess, evaluate, review and document optimised capital allowances claims for our clients. We believe that core capabilities are essential to maximise savings in all industry sectors including offices, hotels and leisure, healthcare, manufacturing and so on. Whilst some industries require a more truly specialised approach such as the water industry or previously sports stadia and grounds (safety at work), we are also firm advocates of establishing expert knowledge in our client sectors.

Years of experience in listening to our clients business ideas and aspirations has taught us where best to place our focus in building strategies to increase allowances and savings. Existing building alterations may throw up a high degree of incidental assets, hotel projects will include a significant amount of embellishments and finishes, and healthcare builds will contain a high incidence of protective and clean assets. We listen, we learn, and we understand to how best develop our services to serve our individual clients.

Land remediation relief

An extremely rewarding tax relief that necessitates a highly specialised level of qualitative due diligence.

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Capital allowances advice requires a good degree of technical due diligence and entitlement considerations, and a high focus on analytical cost skills. However, the extremely valuable land remediation relief requires an opposing approach. To secure this relief It is fundamentally important to carry out a thorough understanding and review of all relevant client, transaction, property, environmental considerations, remediation strategy, and relevant costs to advise clients property. Failure to do so could be very costly.

A full review of this tax relief by HMRC several years back resulted in higher levels of legislative entitlement to focus the financial benefit where previously intended. Robust due diligence is key and must be enacted with the both the client’s and project consultant’s assistance to enable full disclosure of all relevant case facts. Our consultants are highly motivated to ensuring all client’s take advantage of this valuable project saving but with the correct, detailed approach.

Key capital allowances contacts

Avison Young releases Q1 2021 South East Offices update

Avison Young releases Q1 2021 South East Offices update 6 May 2021

Strategic real estate advisor Avison Young has released its latest quarterly South East update, which focuses on performance of the 10 key office markets in the south east of the UK.

Occupier market

Piers Leigh, Principal South East Offices, Avison Young, said:
“Despite lockdown restrictions, the year has started off relatively well overall for the South East office market. Reading has been the star performer this quarter with 80% of last year’s take-up being recorded so far. This was largely driven by the 117,000 sq ft Three transaction at Green Park. The market has seen demand polarised between larger enquiries becoming active again and the continued pipeline of sub 10,000 sq ft demand, but overall sentiment is picking up as occupiers focus on a return to the office as restrictions are eased.”

Overall, Q1 take-up totalled 388,300 sq ft, just 2.6% on Q4 2020, which was the second strongest quarter of last year. However, this was 16% down on Q1 2020, which had been largely unaffected by the pandemic.

The out of town market saw the largest take-up bolstered by the Three letting in Reading. With other larger transactions taking place in the wider South East market, such as Unilever committing to an Agreement to Lease on a new 275,000 sq ft HQ in Kingston, confidence is beginning to return to the market.

The Department of Work and Pensions has been the most active occupier across the South East this quarter, having transacted on six deals totalling 147,643 sq ft.

Key South East office occupational transactions in Q1 2021:

  • Three: 117,000 sq ft at 450 Longwater Avenue Green Park Reading at £38.50 psf
  • Global Banking School: 68,760 sq ft at Greenford Square at a rent of £19.25 psf on a 15-year lease
  • PVH Corp: 50,000 sq ft at One Wood Crescent in White City
  • Department for Work and Pensions: 32,890 sq ft at Kennet Place Reading at a rent of £29.00 psf for a 5-year lease
  • Department for Work and Pensions: 1&3 Hammersmith Broadway on a 5-year lease, at a rent of £39.50 psf
  • Yoooserv: 20,000 sq ft at Building 5, The Heights in Weybridge on a 5-year lease
  • Department for Work and Pensions: 17,000 sq ft Egale 2, Watford at £32.00 psf

Investment market

James McFeely, Director South East Offices Investment, Avison Young said:
“Unsurprisingly nine months of Covid restrictions impacted on occupiers’ ability to physically occupy their offices, which has dragged heavily on Q1 2021 investment volumes. Just £579m traded in Q1, substantially below the upbeat start to 2020, which totalled £1,083bn. Yet as we begin to see the end of the third national lockdown there is a shift of attitudes. Predominately, occupiers appear to be keen on a partial return to office and the investment market is seeing a greater depth of investment requirements. Assuming the easing of lockdown continues, the second quarter could see a quick rebound.”

Q1 2021 saw £579m of South East office transactions across 25 deals, representing a fall of 41% on Q1 2020 and 26% down on the 5-year average of £783m.

Prime yields remain stable at 5.75%. With investment supply restricted and lockdowns easing we may see yield compression over the year, especially as office occupiers make an anticipated return.

A clear theme has been the resurgence of Out of Town investment which accounted for the majority of transactions during Q1.

Key South East office investment transactions in Q1 2021:

  • P&G, The Heights, Brooklands, Weybridge. 100,900 sq ft – Price: £49.55m – 5.22% - Purchaser: Private Overseas – Vendor: L&G
  • 214 -240, Cambridge Science Park, Cambridge. 159,897 sq ft – Price: c.£95.00m – c.4.38% – Purchaser: Brockton Everlast – Vendor: L&G
  • Object House, Vanwall Business Park, Maidenhead. 53,821 sq ft – Price: £20.90m – 7.17% - Purchaser: Kamco (M7) – Vendor: L&G
  • Radius House, 51 Clarendon Road, Watford. 41,226 sq ft – Price: £17.13m – 5.60% – Purchaser: CLS Holdings – Vendor: M&G
  • Anchorage, 34 Bridge Street, Reading. 29,998 sq ft – Price: £9.77m – 6.83% – Purchaser: Corum – Vendor: Federated Hermes

Avison Young’s quarterly South East office update focuses on 10 key markets, made up of in town and out of town markets, covering the whole of the south east geographical area (Cambridge; Milton Keynes; Oxford; Basingstoke; Reading; Maidenhead; Slough; Crawley; Guildford, Woking & Weybridge; and Watford).

To read the full research update on South East offices, click here.

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