If you have purchased a property used for care or supported living and/or spent thousands of pounds to develop, refurbish and adapt a building used as a care facility, you are likely due a tax repayment and future tax savings from HMRC.

Identifying and unlocking these tax savings requires surveyors and tax experts in and a form of tax relief known as ‘capital allowances’. As it is not a service provided by an accountant, many care property owners and investors have not made a claim and are completely unaware of the tax savings they could be benefitting from.

That's why Supported Living Gateway have teamed up with Zeal to help their members pay the right amount of tax.

What are capital allowances?

Capital allowances are a form of tax relief for plant & machinery used in a business, like a care home or supported living facility. Accountants will claim capital allowances on items like furniture, computer equipment, vehicles etc to reduce your taxable profits.

Capital allowances CAN’T be claimed on buildings, but they CAN be claimed on ‘Fixtures’ embedded within the fabric of the building. Items like electrical & heating systems, kitchens and bathrooms, even the door handles and carpets, if the property is used for assisted living care.

Capital allowances are available to all, whether you are a sole trader, partnership or a Limited company. Landlords can also claim!

Why are they under claimed?

When you buy a building (or even build an extension), the price for the different fixtures embedded in that building are not itemised out! A surveyor is required to assess the values for capital allowances claims.

Capital allowances within buildings is also a specialist area of tax legislation that is often overlooked or misunderstood by accountants and tax advisors. It’s not new and it’s not a tax scheme, it’s just historically only been claimed by the biggest businesses and wealthiest investors.

What does this mean for the owners of care or supported living facilities?

For buildings that qualify, a claim could result in a tax deduction of typically 15% to 30% of the original property purchase price (40%+ for refurbishment and construction costs). For example, if you spent £250,000 purchasing your property, you could be entitled to around £62,000+ in capital allowances.

For a basic rate taxpayer, this would save income tax of £12,500 to £25,000 (depending on tax rates applicable). A company would save corporation tax of around £12,000 at current tax rates.

Unfortunately, unless you incurred the expenditure within the last 2 years, the tax savings are generally received over several years, reducing future tax payments. However, as you can go back 1 tax year to claim the relief, often 2 years’ worth of tax savings are received as a cash repayment!

Making a claim

You are probably thinking this sounds really complicated and time consuming! In fact, it really isn’t!

All that is required is a copy of your accounts and tax returns.

A surveyor would also visit the property to carry out a site survey. A detailed report is then prepared that is submitted to HMRC to support the claim for tax relief.

How do I find out if I can make a claim?

To maximise your claim and ensure you stay compliant with UK tax legislation, it is recommended that you contact a specialist firm like Zeal Tax. A short conversation with their team will quickly identify whether you can make a claim and how much you could be due back.

Zeal also work on a success fee basis, so it costs nothing to find out if you can make a claim and how much tax you could save.

Who are Zeal Tax?

The team at Zeal have had unprecedented success agreeing capital allowances claims in the care sector. They have worked with some of the largest UK care providers but specialise in helping small businesses and independent investors obtain the tax relief they are due, significantly increasing the return on their investment. . The process is quick and easy requiring little input from property owners or their accountants - many owners receive their tax savings in as little as 4 weeks, achieving on average around £35,000 in tax savings.

Initially we thought it was ‘too good to be true’ but no! Zeal’s fee was taken out of our first years tax savings with no upfront costs. We saved over £10k in this tax year and will save again next year. So glad we allowed Zeal to work for us. We thought ‘ if it isn’t going to cost anything but we may save a lot, why not?’. Highly recommend!

D&D Linton Ltd, South West of England

This article was written by Matt Jeffery, Managing Director of Zeal Tax, a leading capital allowances specialist in the UK, as an educational piece to help Supported Living Gateway members understand their tax relief entitlement.

Zeal can be contacted either by calling 01633 435365 or by email on SLGateway@gozeal.co.uk. Zeal Tax offers a FREE, no obligation consultation and estimate of the tax savings and refund you could achieve.