Capital Allowances: A Basic Guide for Lab Occupiers

Capital allowances are an often-neglected area when companies fit out new labs, refurbish existing labs or invest significantly in equipment.  Lots of companies don’t claim their full entitlement, partly through not fully understanding capital allowances.  Lab based companies in particular stand to benefit far more than most.

We put six quick fire questions to Chartered Taxation surveyor David Harper to simplify things!

What are Capital Allowances?

They’re commercial tax relief available for those that invest in property acquisitions and refurbishment. They’re available on investment when purchasing mechanical & electrical items works, new equipment, flooring, partition walls, decoration, furniture including lab benching, kitchens and more.

Why do lab-based businesses stand to benefit more than most?

Lab businesses typically spend more on M&E as they require controlled environments, extraction, greater air changes, greater climatic control and need cellular layouts. They also purchase expensive items of equipment that can be eligible and may qualify for research and development allowances.  This can generate allowances far greater than other businesses in, say, just office spaces, although office fit outs qualify too!

How large are the potential benefits?

Typical savings are between 19% and 25% of fit out costs. For occupiers spending £5m this equates to £950k to £1.25m. If businesses qualify for research and development relief then the deduction can be up to £1.075m.

Why aren’t companies claiming their full entitlement? 

In our experience individuals aren’t fully aware they exist, don’t fully understand them, or rely on general practice accountants.  Specialist property taxation surveyors, such as Veritas Advisory, can interrogate fit out expenditure in far greater detail, which typically results in identifying additional savings of 75% more.

What if I’ve already completed the works and submitted a claim?

Claims can be retrospective (there is no time limit), and any items not covered under a previous claim can still be claimed.  Any expenditure on works undertaken between 1^st April 2021 to 31^st March 2023 may be eligible for the Super Deduction

Is it expensive to investigate?

We undertake free initial consultations and only charge once we know we can achieve savings for our clients. Fees are based on a percentage of savings to align our interests with our clients.

If you’d like to find out more or think you may have unclaimed Capital Allowances then please contact David Harper on David.harper@veritasadvisory.co.uk or 07753 857010.

Our expert team provides strategic commercial property advice to investors and occupiers on laboratory and office space to let, to learn more about how we can support and improve your search for life sciences space, contact us on 0161 706 1888 or email jamie.bottomley@trackrealestate.co.uk.