Is the Structures and Buildings Allowance the New Industrial Buildings Allowance?

 The Industrial Buildings Allowance was introduced by the government as part of its 1945 Income Tax Act to boost post-war productivity in industry. The idea behind the scheme was that, whatever the capital cost of constructing a manufacturing or processing building, whoever oversaw the building would be given tax relief. The Industrial Buildings Allowance was originally aimed at the productive industry, but it was expanded to include allowances on infrastructure, such as tunnels, bridges, roads, and even hotels and commercial properties. The Industrial Buildings Allowance allowed relevant entrepreneurs to pay less tax, usually for twenty-five years. Thus, the allowance provided an incentive to build industries that would boost the economy in a post-war society.

The Industrial Buildings Allowance no longer exists, having come to a phased withdrawal that ended in the financial year beginning 1^st April 2011. However, businesses can still claim tax relief based on this building work, such as the Structures and Buildings Allowance, which was introduced by the government in 2018.

Structures and Buildings Allowance vs. Industrial Buildings Allowance

 The Structures and Buildings Allowance gives a business a 2% flat rate relief over fifty years for building work on most non-residential buildings, such as factories, warehouses, and infrastructure, such as tunnels, walls, and bridges.

Initially, the Structures and Buildings Allowance seems to be an updated version of the Industrial Buildings Allowance. However, there is a main difference in how the tax claim works when the building is sold. Industrial Buildings Allowances had worked on the idea that, if a building was sold within its twenty-five-year claim, all of the allowances that had been claimed by the seller would be passed to the buyer to be written off over however many years remained of its claim. However, the Structure and Buildings Allowance works differently, as the buyer simply inherits the tax written-down value that remained.

Also, the Structure and Buildings Allowance does not have a fixed timescale. While the Industrial Buildings Allowance was set for twenty-five years, the government is lending the business tax relief until the asset is sold for profit under the new Structure and Buildings Allowance.

Are You Eligible to Make A Claim?

To claim a Structure and Buildings Allowance, there are three main conditions that you must satisfy.

1.      The Building Must Be in Qualifying Use

This means that the building you wish to claim tax for must be used for a qualifying trade, such as a hotel, sports pavilion, or is in use as a commercial building.

2.      The Expenditure Must Be Qualifying Expenditure

The qualifying expenditure on a building is the capital expenditure earned by either the person who constructs the building or by whoever has bought the building unused from a property developer.

3.      You Must Hold the Relevant Interest in the Building

If you have constructed the building or own it, then you are the person who holds relevant interest. If the structure is sold after the tax is claimed, then the new owner can claim tax allowances under the Structure and Buildings Allowance.

If you would like to find out more about being eligible for claiming a Structure and Buildings Allowance, our specialists at Areande will be happy to offer advice and a guiding hand.

Reasons Why you Should Claim R&D Tax Relief

 At Areande, we are HMRC tax specialist in R&D tax relief. We can help you get a tax reduction or a cash payment on your innovation projects. R&D tax relief will give you extra income which you can spend on developing your innovative projects further and growing your business.

The UK government introduced R&D tax relief in 2000 to encourage businesses to develop their scientific and technological innovation. It’s an incentive for all UK companies to carry out R&D in their industry, allowing them to create or improve products, processes and systems.

R&D tax relief schemes:

SME scheme is for companies with less than 500 staff and a turnover of under €100 million or a balance sheet total under €86 million.

Research and Development Expenditure Credit (RDEC) scheme is for large companies, but can also apply to SMEs and large companies who have been subcontracted to other companies. RDEC tax credit is 13% of your qualifying expenditure as of 1 April 2020.

Early this year, in July 2020, the government announced it wanted to increase public investment in R&D expenditure to £22bn per year by 2024-25. They want to encourage investment in innovative projects which could improve whole industries and benefit everyone.

For your innovative projects, the following qualify for R&D tax relief through Areande:

1. Staff working on R&D projects

·         Permanent employee salaries, wages, class 1 NIC and pension fund contributions

·         Externally provided R&D staff costs paid to an external agency

2. Subcontracted R&D services

·         SME scheme companies can claim for 65% of the payments made to subcontractors

·         RDEC scheme does not allow large companies to claim subcontracted R&D expenditure unless it is directly undertaken by a charity, higher education institute, scientific research or health service organisation, an individual or a partnership of individuals

3. R&D consumables

·         Items such as materials and the portion of water, fuel, and power directly used for R&D projects

4. Software used for R&D

·         Claim any software solely used in R&D

·         And, claim a portion of software partly used in R&D

5. R&D prototypes

·         Design, construction and testing costs

·         However, prototypes built for sale are considered as a production unit and outside of the R&D scheme. If you used R&D to create the prototype, then you can claim for design, modelling and testing costs but not production costs and materials

6. Clinical trial volunteers for R&D

·         Research organisations and pharmaceutical companies can claim for payments made to volunteers taking part in clinical trials

7. Contributions to independent R&D

·         Only large companies can claim R&D tax relief on contributions they make towards funding independent R&D. The R&D must be carried out by the hired company and related to your trade. Contributions must be made to an eligible individual or a partnership of individuals or organisations such as a charity, higher education institute, scientific research or health service

8. Collaborative working in R&D

·         If you are working with other companies on an R&D project, each company can claim relief on the qualifying costs they have incurred

·         If you collaborate with a university or a research institute, only you can claim relief on the qualifying costs

How Areande can help you

An R&D tax claim can be a manual, lengthy process. We take the hassle out, leaving you to focus on developing your R&D projects. We offer a service which is beyond compare and make claiming R&D tax relief simple.

 

If you are not sure if you qualify or have been working on an innovative project and want to claim, talk to us today

Innovating for a pandemic-proof future…can your business help?

 As businesses acclimate to the new measures necessitated to mitigate the spread the coronavirus, there is a growing consensus that the fabric of global business cannot return to its old form. While many individuals affected are stoically —and perhaps at times, a little wearily— referring to the challenges that businesses face today as ‘the New Normal’, some business leaders are taking on a more forward-thinking approach.

What is the future of global business?

What can we do better to protect public safety?

How can we innovate to help our sector function in the instance of future health crises?

Many companies, across sectors, are leading the way in committing to developing creative solutions to not only ensure their business survives amidst a pandemic, but has the potential to thrive.  

Eating Out

Following the easing of lockdown measures across much of Europe, many punters are enjoying a long-awaited return to their favourite cafes, bars, and restaurants. This supported the findings of retail analysts, Kantor, whose study into social media revealed that eating out and going to a bar with friends were among the top three things people were looking forward to, ahead of lockdown easing.

Now many countries have seen eateries reopen- often under specific restrictions- those working within the sector are looking for innovative ways to sustain business, while boosting customer confidence.

French designer Christophe Gernigon has caught many imaginations- and no shortage of media attention- with his ‘PLEX’EAT’, which is made from Perspex. The PLEX’EAT represents an oversized, transparent lampshade, and allows customers to eat in their own personal bubble, while dining out at their favourite establishment.

Meanwhile, in South Korea, robot bartenders are preparing cocktails for punters as part of their government’s campaign for ‘distancing in daily life’.  

Architecture

The coronavirus pandemic has had a devastating effect on the residents of care homes. In the UK alone, coronavirus is reported to have claimed the lives of 66,112 care home residents since the outbreak (as of June 2020). In an article for the The RIBA Journal, Stephanie Cousins observed, “care homes across the UK were devastated by Covid-19, a situation exacerbated by the fact many are densely populated with residents forced to share bathrooms where infections can spread.” She later posed, “Should minimum standards be made more fit for purpose and conducive to health and wellbeing?”.

As many countries look for safe ways to reopen schools and universities, attention has also turned to designing safe teaching spaces. London-based studio, Curl La Tourelle has proposed the UK’s first ‘pop up school’, in the form of socially-distanced outdoor tents. The idea is currently being trialled at Manorfield Primary School, in Tower Hamlets.

Health Protocol Compliance

Supervision of public adherence to safety protocols brings unique risks of its own. Robotics can be the salvation. US company Boston Dynamics created ‘Spot’ a robot dog, which a park in Singapore, reminding the public, “Let’s keep Singapore healthy […] Please stand at least one metre apart”.

The Future: Research and Development

Research and Development initiatives encourage businesses to find innovative solutions that can take on the challenges we face, in these unprecedented times. In the UK, businesses which innovate could be eligible for Research and Development tax relief.

What is Research and Development tax relief?

Research and Development (R&D) reliefs support companies that work on innovative projects in science and technology [GOV.UK]. According to information from gov.uk, “work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology […] it cannot be an advance within a social science- like economics- or a theoretical field- such as pure maths.”

Is my business eligible for R&D tax relief?

There is specific, but broad criteria, which can qualify a business for Research and Development tax relief.

Areande, innovation tax relief specialists, offer a streamlined service which uses advanced technology to claim back as much as possible. They could help your business secure either a cash payment, or a reduction in your tax bill.

What replaced the Industrial Buildings Allowance

 

With building (and rebuilding) at the forefront of the government’s post-coronavirus strategy, it’s no wonder that infrastructure is a hot topic right now. The new “build build build” plan from Boris Johnson focuses mostly on creating new homes from the regeneration of vacant and redundant buildings, and it’s being heralded as “the most radical reform to our planning system since the Second World War”.

After the Second World War, it wasn’t just the planning system that changed. In a bid to rebuild the country, the government lowered the cost of construction for businesses by introducing the Industrial Buildings Allowance (IBA). The Industrial Buildings Allowance formed part of the Income Tax Act and it was designed to encourage companies to start building.

Offering tax relief on the cost of constructing a building to be used for manufacturing, the Industrial Buildings Allowance gave projects tax relief for up to 25 years after construction. It first only included buildings but then expanded to include other structures such as walls, tunnels and bridges.

But the Industrial Buildings Allowance was discontinued in 2008, 63 years after its introduction. So for companies looking to begin new building projects now, what tax relief is available?

What replaced the Industrial Buildings Allowance?

Ten years after the abolition of the Industrial Buildings Allowance, a new scheme was introduced that many saw as its direct replacement. The Structures and Buildings Allowance (SBA) was formed in 2018 and applies to the costs of building projects that are incurred on or after 29th October 2018. The commencement of the scheme was relatively complex, and included measures to prevent taxpayers altering existing building projects to fall within the relief.

 

Similar to the Industrial Buildings capital allowance claims, the SBA covers factories, warehouses, bridges and tunnels. But the scheme also covers more modern requirements like office and retail space, allowing a vast number of businesses to claim the relief. The structure or building must be in use (or used within the last two years) in order to claim the annual allowance.

What is the Structures and Buildings Allowance?

The Structures and Buildings Allowance is applicable to a majority of projects, but excludes land and properties for residential use. There are also caveats that deal specifically with property leases, so that landlords and tenants can both claim under the scheme.

When the SBA was introduced, it offered tax relief on new construction expenditure for 50 years at a rate of 2% per annum. However, when the Finance Act 2020 was introduced, it changed the rates of the Structures and Buildings Allowance to 3% of expenditure over 33 and a third years. For the period between October 2018 and April 2020, an additional amount of the 1% hmrc capital allowances can be claimed.

When claiming under the SBA, businesses must identify a ‘chargeable period’, which must either be from the date the business started using the building or from the date the expenditure happened. This includes new owners of structures, who can also claim tax allowances under the scheme as long as the allowance statement is kept up-to-date.

Returning to Work? Make it Right. R&D Tax Credits

 The Great Return to Work

So, very shortly you’ll be returning to the daily hustle and bustle of office life. As productive as you may have been working remotely, sometimes, nothing beats being hands-on with an ear to the ground and your finger on the pulse.

The COVID-19 pandemic of 2020 has reasonably caused many of us to reflect on our personal productivity and output; both professionally and personally.

In many ways, the world stopped in motion; however, it has given us the opportunity to reset, re-evaluate and redesign the ways in which we work.

Did You Know? R&D Tax Credits Could Help You

Did you know that you may be able to claim tax relief on your Research & Development (R&D) expenses? Believe it or not, many small-and-medium enterprises (SMEs for short) are remain unaware of such a helpful scheme.

For perspective, on average, SMEs claim approximately £50K per year utilising R&D tax credits.

If you haven’t already investigated the potential benefit to your business under the R&D tax credits scheme, make the return to work your opportunity to make it right.

Tell Me More! The Details R&D Tax Credits

The scope of the R&D tax credits scheme is vast and wide.

Theoretically, the diversity of industry sectors it covers are endless. So long as your business is registered as a limited company within the UK that is subject to Corporation Tax and you have traceable expenditure on R&D, the scheme may be of benefit to your business.

Okay... I think I Am Eligible. What is R&D?

Put simply, R&D is the procedure in which a company may innovate or reformulate products, procedures or services.

This process can be in the design and development of new or existing products and services.

Yeah! My Business Conducts R&D. What Things Should I Highlight?

You will be happy to know that the costs that may reasonably attributed to R&D expenditure are surprisingly vast and robust. Staffing costs (including that of admin) may be included within the calculation provided they are in direct support of the project.

So too are the cost of raw materials, utilities and other consumables.

For the benefit of R&D tax credits, some software license may be included within the R&D tax calculations. There are limitations to which software licenses may be included for the relevant calculation; however, as computer aided technology and software becomes more integral to business – as well as the increasingly more common remote working options – it does seem that such limitations will become more robust and bespoke as time goes by.

It must also be noted that to make benefit of the R&D tax credit scheme, such expenses must be attributed to the R&D of goods, services or processes that may benefit your industry sector, and not limited to solely your own business.

Just So I Know…What Can’t I Include?

Great question!

The Government has given succinct guidelines as to what cannot be included within an R&D tax credit claim. They are:

·         Capital Expenditure

·         Production and distribution of goods/services

·         Any costs relating to the purchase of land and rent/rates

·         Any costs of trademarks and patents.

Great! What Shall I do Now?

Well, the first priority would be to look at your business model and determine whether you have conducted R&D and what costs can be attributed directly to that.

The scheme is used to reward innovation and improved output, so it is advisable to make use of the assistance available.

Here at Areande, we specialise is assisting businesses make the most of their innovation expenditure and R&D tax relief.

Get in touch with our expert team today.

4 RESEARCH AND DEVELOPMENT COSTS YOU CAN CLAIM BACK FOR.

In these uncertain times, businesses can’t afford to throw thousands away every year can they? Well, they are and you could be too.

There are currently billions of pounds of unclaimed innovation tax relief and that’s not a shock considering less than 1% of businesses are actively claiming.

Why? Simple. They don’t know that they can even claim in the first place...or what even categorises as a claimable research and development cost.

An eligible R & D cost would be any money spent developing or improving any products, services or processes. You may already be doing it and not even knowing. don’t worry, you’re in the majority. Hopefully the following list will break them down and explain.

Here are 4 Research and Development costs you can claim for:

1)      STAFF COSTS

Developing something new usually has some staff costs attached. You may have to hire some extra people to develop it and get it off the ground. Or hire someone on a subcontract basis or even a freelancer.

You can claim for it all.  Any staff you have hired to further improve a product, service or process all falls under research and development.

2)      MATERIALS

Depending on the business this may vary but there may be some material costs. For example, if a prototype has been manufactured or parts have been ordered to build a new product. again, this is a cost you could be claiming back on.

3)      SOFTWARE

This can also vary depending on the business. Software Cost could be any software you have had to purchase to either further develop or create something new. But let’s say your new product is software. You may incur some Software Development Cost. Either way, you can claim.  

4)      UTILITIES

You can even claim any water, lighting and heating used for any research and development purposes!

FACTS

-          UK paid out £4.3bn in claims in 2018

-          Over 30 bn is spent on R&D per year

-          Approximately 50,000 claims per year are submitted to HMRC (and that’s still less than 1%)

Your business could be losing thousands by not claiming on these Research and development costs and it isn’t just the four listed, there’s more!

It couldn’t be easier to check with companies like Areande. In a few clicks you can check if your company is eligible online. https://www.areande.com/check-eligibility/

Or if you want to check exactly how much you could be owed through the easy-to-use calculator, click here: https://www.areande.com/calculator/

The experts do it all for you so it’s a win, win!

You don’t have to worry about dealing with HMRC or any paperwork. You can simply watch the money you save come back to you.

Why do the government want to help you? They want you to Research and develop and as a business owner and you should too.

I will also link the website that has a fantastic live chat to answer any queries you may have. https://www.areande.com/.

A few minutes of your time may be the difference between you having thousands or having them taken off you.

Make the most of this fantastic scheme.

By Marcus Hardaker

How can I claim Capital Allowances on a Commercial Property?

Do you own a commercial property or have you got a furnished holiday let?  Capital allowances for commercial property are a treasured form of tax relief. You don’t need to worry about how long you have owned the property, or if you built it, you will still be able to claim.  All properties are included across the commercial sector and the relief you can achieve frequently comes back in the form of a substantial rebate and an ongoing reduction in your tax bill.

It doesn’t matter whether you own the property either privately or as part of a limited company, or even when you purchased the building. At Areande they will help to find

allowances and you will be able to use them against your profits straight away. This is the reason it is such a highly valuable form of relief.

Knowledge

Areande are a modern, dynamic, innovation tax relief company, who aim to demonstrate their ability and knowledge to their clients. A team of experts in Areande claims, means clients can leave the claiming to us while you focus on innovating. Their aim is to reduce your costs in relation to preparing these claims and ensure you get the commercial property capital allowances you are owed. 

Tax Legislation

It is fair to say that tax legislation covering commercial property capital allowances are complicated. The principles to determine what you are eligible for and how items of expenditure are embedded in case law. This can be problematic when you are trying to understand your eligibility and it becomes more complex by vague or unobtainable building documentation which makes it hard to devise a comprehensive claim and gain the full tax relief due. It is important to seek professional knowledge so you can guarantee the key information and documentation is attained and properly understood so that all qualifying assets are acknowledged.

Eligible Expenditure

The greatest failure in identifying eligible expenditure happens when commercial property owners do not recognise items of plant and machinery in buildings which they own. Plant and machinery assets which make up the fundamental construction of a commercial building include heating/cooling systems, emergency lighting, security systems and sanitary ware etc. Usually, these costs are not separated from the building cost and are implicit to freehold additions with no allowances claimed.

Common Misconceptions

The main misconceptions are that commercial property capital allowances should be attained when the cost is suffered. This isn’t the case. It is achievable to claim tax relief for expenditure dating back to when the property was first purchased.  In the majority of circumstances, it is possible to claim any missed allowances even going back several years, frequently to when the property was initially attained and for items which were not considered to qualify at the time. Basically, there is no exact time frame for this as long as the items are still in use for the purpose of the trade.

Summary

Capital allowances are available to whoever is incurring capital expenditure either buying or building commercial property or furnished holiday lets. You can claim these capital allowances on various purchases or investments. They will be deducted by a proportion of these costs from your taxable profits to reduce your tax bill. It is important to ensure all tax relief forms are filled in correctly and seeking professional expertise is vital. Find out how Areande can help today.