Q. What is a HMO / Multi-occupancy property?

A – A HMO or House in Multiple Occupation or multi-let property is defined by HM Government as:-

  • A building or part of a building occupied by more than one household which shares certain amenities such as a bathroom or kitchen
  • A converted building occupied by more than one household which is partly converted into self contained flats
  • A building which is made up entirely of self contained flats which do not meet the 1991 Buildings Regulation and more than one third of the flats are occupied under short term tenancies

This means an HMO could be, amongst other things:

  • Shared flats or houses
  • Bed sits
  • Student halls of residence
  • Nurses’ or other key worker accommodation

Some hostels and bed and breakfast establishments might be classed as HMOs. To check, please refer to the definition in the Sleeping Accommodation Guide from HM Government.

Q. What is deemed to be a communal area?

A – Any area within an HMO that is accessed by all occupants. In buildings where there are individual dwellings, communal areas are usually the corridors, escape routes, hallways and stairways. In HMOs where certain amenities are shared, communal areas also include any shared kitchens, bathrooms and living areas.

Q. What are Plant & Machinery Assets?

A – These are items which qualify for tax relief, and include such diverse items as sanitary ware, kitchen installations and heating installations. The list of qualifying items is lengthy, but in most properties equates to around 7-12% of the purchase price of the property. Meaning, a HMO property purchased for £200,000, could attract tax relief of £24,000!

Q. What is the Annual Investment Allowance?

A – The AIA is available on virtually all plant or machinery expenditure. It may be claimed on long-life assets, integral features and other special rate expenditure, as well as on general plant and machinery, and the taxpayer is free to allocate his AIA against any type of P&M expenditure in any way he chooses. It is to be expected that taxpayers will commonly allocate the AIA against the expenditure that would otherwise receive the lowest rate of capital allowance (generally 8% special rate expenditure).

Up to £250,000 may be used in the year of purchase against taxable income. Any balance over the £250,000 limit is then added to the general pool of assets and the prevailing WDA applies.

Q. How far back can I claim?

A – Changes within 12 months

If you make a mistake on a tax return you’ve got 12 months from 31 January after the end of the tax year to correct it. This is called an ‘amendment’. For example, for the 2011-12 return you have until 31 January 2014 to make an amendment, that is 12 months after 31 January following the end of the tax year. This time limit applies whether you filed online or on a paper return.

If you filed online from the 2011/12 return onwards you can also make an amendment online.

For paper filers there’s no special form for making an amendment – just write to your Tax Office and give the details (you’ll find the address on your tax return, your tax calculation and your Self Assessment Statement). We can help you with this process.

If as a result of your amendment you are due a tax rebate (repayment), tell HMRC how you’d like to receive it.

Changes dating back more than one year

There are special rules if you want to tell HMRC about an adjustment and/or claim a repayment when it’s too late to make an amendment.

We will be pleased to manage this for you, or assist your accountant with any questions they may have.

If you’ve paid too much tax because of a mistake made by HMRC you can get extra time to claim.

Q. Does claiming CA’s reduce the value of my properties?

A – No. You have a right to claim Capital allowances, and whether they are claimed or not, they are not taken into account when property is valued for commercial or accounting purposes.

Q. Will claiming Capital allowances have an effect on my CGT position, should I sell my property?

A – It is a common myth that claiming Capital Allowances somehow ‘reduces’ your net purchase price, therefore increasing the differential between this and the sale price, Increasing your Capital Gains Tax liability. This is a misnomer.

The tax legislation and published HM Revenue guidance are very clear that capital allowances will not increase a capital gain.

Q. My accountant should have claimed these allowances already?

Your accountant will probably have claimed Capital Allowances for the assets which you have purchased since the original investment. Items such as fire alarm installations, emergency lighting and intruder alarms are prime examples of these items which your accountant should claim for. However, it is a most complex area of taxation, and unless you have had a specific Plant & Machinery survey on your property, then your accountant will not have identified the inherent Plant & machinery within your property. We work with your accountant, on your behalf to maximise your tax claim.

Q. 100% success record?

Yes, every case we decide to taken on, has succeeded in either a refund from HMRC or has mitigated the owners tax bill by reducing it or in a lot of cases wiping it out. We are so sure of the robust processes we go through, and the fact we adhere to the strict HMRC guidelines, that we are happy to offer this no-quibble guarantee.

Q. No win – No fee?

Sure, it’s only fair, that if there are no allowances to be claimed, then there is no fee or costs for you to pay.