Landlord capital contributions to tenants to undertake Landlord works or to contribute to tenants works are very common, especially in order to incentivise tenants to enter into a lease or to extend an existing lease.
Landlords will typically offer inducements, and these tend to take the following forms:
- Rent free period
- Contributions towards works undertaken by the tenant on behalf of the landlord – Cat A Works
- Contributions towards tenants’ fit-out costs – Cat B Works
Reverse premiums or monetary inducements include Cash and Cat A & B contributions however rent free period is not a reverse premium as no money changes hands.
Generally the Tenant cannot claim Capital Allowances where the expenditure has been met by the Landlord. The Landlord’s capital contribution is treated as capital expenditure on the provision of Plant & Machinery – Main Pool, Integral Features – Special Rate Pool and Structure & Buildings Allowances and it is the Landlord that can claim the Capital Allowances.
Contributions allowances need should identified and pooled separately by the landlord and they are not impacted by the new mandatory pooling rules.
Jex Capital Allowances are able to provide the relevant contract / lease clauses to ensure that Landlords maximise their available allowances arising from a Landlord contribution.
We are also able to identify the appropriate asset pool within which to class the Plant & Machinery – Main pool and Integral Features – Special Rate Pool but also utilise our construction knowledge and surveying skills to identify Structure & Building Allowances, and produce the appropriate Allowance Statements arising from the contribution.
Jex Capital Allowances provide a HMRC compliant analysis and report on capital allowance claims, clearly identifying their relevance to the clients business or trade, for submission with self-assessment tax returns.