Typical Capital Allowances in Purchased Property

The capital allowances available when second-hand commercial property is purchased depend on a range of factors including, for example, the type of property, its tax history and its geographic location. However, the following expenditure qualifying for tax relief would normally be expected (as a % of the property purchase price) :

Property Type	PMAs	IBAs
Offices:
Low to medium rise, not air conditioned	10% - 25%
Air conditioned	20% - 30%
Prestige air conditioned	25% - 40%
Retail:
Shopping centres, enclosed	10% - 20%
Distribution warehouses	2% - 5%	sometimes
Hotels:
Provincial	20% - 35%	65% - 80%
Luxury city centre	30% - 45%	55% - 70%
Industrial:
Industrial units	1% - 5%	90% - 95%
B1 office/industrial units	5% - 20%	75% - 90%
Healthcare:
Hospitals	30% - 40%
Nursing homes	25% - 35%
Health centres/surgeries	25% - 35%
Other:
Bars & restaurants	20% - 45%
Leisure centres & gyms	15% - 30%

Key:

PMAs = Plant & machinery allowances. Generally available at 25% p.a. reducing balance (with some exceptions).

For large companies 60% of the tax relief is obtained after three years and 90% after eight.

Small and medium size companies obtain the tax relief faster. Small companies obtain 72% after three years and 88% after six years. Medium sized companies obtain 63% after three years and 88% after serve years.

IBA's = Industrial buildings allowances (depending on the use of the property) . Available at 4% straight line over 25 years and often accelerated over a shorter period for purchased property.

Notes:

1. Capital allowances qualifying percentages for construction works are normally
   significantly higher (e.g. new-build, extension or refurbishment works). Please see our separate qualifying percentage guide for construction projects.
2. The estimates provided above are not suitable for, or intended to be used for, making payments of tax or for preparing tax computations and filing tax returns, for which a appropriately qualified professional should be appointed to provide advice and prepare a capital allowances analysis. Please contact us to discuss carrying out this work.