Capital allowances advisors

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.

News and updates

Q4 uplift in office market was driven by strong demand and constrained supply, making it the busiest quarter of the year for occupiers

Q4 uplift in office market was driven by strong demand and constrained supply, making it the busiest quarter of the year for occupiers 21 February 2023

Avison Young has released its latest Big Nine office market update, covering the final quarter of 2022.

Occupier market

Q4 was the busiest quarter of the year with a total of 2.5m sq ft transacted, 14% higher than the 10-year average. This brought annual take up to 8.1m sq ft, 41% more than in 2020 but 1% below 2021 levels.

Liverpool was the outperformer of the quarter, 45% up on 10-year average levels, followed by Manchester (42%) and Edinburgh (38%). Overall, city centre markets outperformed the average by 21%.

Occupiers continued to reconsider their spatial needs. Over the course of the year, the average lease size shrunk by 19%, and the share of leases 25,000 sq ft or larger fell to 21% in 2022 from 34% in 2021.

Meanwhile, occupiers sought top quality workplaces to attract and retain talent. In 2022, 34% of all Big Nine leases – 44% in city centres – were for grade A space, double the levels seen in 2018. With strong demand and constrained supply, Leeds, Glasgow, and Manchester saw increases in prime rents on last quarter, with average quarterly prime rental growth of 1.2% across the Big Nine. Annually, prime rental growth increased to a new record high of 6.5%.

Major deals of the quarter included BlackRock’s expansion to 139,182 sq ft at Dundas House in Edinburgh, Deloitte’s expansion to 63,066 sq ft at 100 Embankment in Manchester, and video games developer Firesprite’s 50,123 sq ft commitment to Duke & Parr in Liverpool.

Over the course of 2022, the sectors which took the most space were professional services, government and services, and financial services, accounting for just over half of all major deals.

Overall, availability continued the downward trend seen since Q1 2022, albeit at a more modest pace. Newcastle, Edinburgh, and Bristol were the tightest markets in Q4, whilst Birmingham, Leeds and Glasgow had greater levels of supply. While 2022 was the busiest year for development completions since the global financial crisis 37% of the total under construction pipeline is already pre-let, including refurbishments.

Charles Toogood, Principal and Managing Director, National Offices Team at Avison Young, said:

"Despite ongoing uncertainty, Q4 saw a healthy level of transactions, marking a 14% increase over the 10-year average, and bringing annual take-up to 8.1 million sq ft. We saw strong performance in city centres, particularly in Liverpool, Manchester and Edinburgh. While occupiers sought top-quality workplaces to secure their place in the war for talent, they also continued to reassess their spatial needs, leading to a 19% reduction in average lease size. However, several key occupiers, among them the major deals in the quarter, were upsizing, underlining that less space is not the universal answer.

Looking ahead, there are some standout schemes in the development pipeline for 2023, including projects such as 2 & 3 Haymarket in Edinburgh, One Centenary Way in Birmingham, and One Central in Glasgow set to complete, which are already partially to fully pre-let."

Investment market

On the flipside, Q4 was the least active quarter for the Big Nine investment market since 2012, excluding the Covid-impacted Q2 2022. Just £153m was transacted, 49% down on Q3 and 79% below the 10-year Q4 average.

However, 2022 was a story of two halves. Driven by the strongest H1 since 2016, whole-year volumes were just 16% lower than 2021 and 19% below the 10-year average. Manchester saw the most activity over the year at £472m followed by Birmingham (£431m) and Bristol (£300m).

The largest transaction of the quarter was French asset manager La Française’s purchase of 101 Barbirolli Square for £48m, Manchester, the city having been a long-term target of theirs to add to regional presence in Bristol and Edinburgh. Other major deals included Hillview and Shlomo’s value-add acquisition of 121 Edmund Street, and Circle Property’s cash-out sale of Somerset House to Somerset Land & Property, both in Birmingham.

Overseas investors were the most active buyers in 2022, accounting for 45% of all transactions, whilst UK PropCos and UK Institutions accounted for 28% and 16% respectively. This level of overseas involvement was the highest since 2013. UK institutions showed some sign of re-entering the market, up on just 8% of all transactions in 2021.

At the end of Q4, £404m of assets were available across six of the Big Nine cities, and a further £87m under offer. A total of £426m were withdrawn from the market across these cities during 2022, with sellers unable to achieve asking prices for buildings such as 103 Colmore Row in Birmingham and the Liver Building in Liverpool.

Patrick Scanlon, Director, Innovation and Insight at Avison Young, said:

“While the economic headwinds are undoubtedly creating a challenging environment for the UK office market, we expect the healthy demand for best-in-class space to continue. We believe that the current relative paucity of top quality new available space will continue to place upward pressure on prime rents during this period of economic uncertainty, particularly in those cities with low Grade A vacancy rates”.

To read the full research update on Big Nine office markets (Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle), click here.

Patrick Scanlon
+44 (0)7810 127 600