Corporation tax relief

Corporation tax relief


Introduction

Our client approached us as their company was considering building a structure outside of their trading premises, which would aim to protect the premises from flooding and prevent damages.

To do this, they would need to acquire a piece of land next to the building and incur demolition and construction costs.

The Issue

The cost of this project was fairly significant, so it was important to the company that they understood what reliefs were available to them.

They had read some conflicting information as to what costs were deductible from their trading profits, and wanted a professional opinion on what could be claimed.

They wanted to ensure any relevant claims could be made accurately on the company tax return.

How we solved it

We considered the costs they were due to incur and applied them in line with the relevant tax legislation.

There were different considerations to review, such as whether the expenses were capital or revenue in nature, how expenses could be deducted and what allowances were available to them.

The outcome

It was concluded that in their circumstances, they could deduct the cost of the land itself only on a future sale of that land. However, any construction and demolition costs could be eligible for Structures and Buildings Allowances (which provides a 3% annual deduction over the life of the new structure).

This provided the client with certainty for their reporting and the confidence that they had maximised their potential savings.

Next Steps

If you would like more information on corporation tax relief or any support with your tax queries please do get in touch.



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