Tax relief in the Residential Sector

As a landlord of a Build to Rent (BTR), Private Rented Sector (PRS) or Purpose-Built Student Accommodation (PBSA) investment property, you may be entitled to claim tax relief on your expenditure through capital allowances.

Capital Allowances will not be available on the living (i.e., dwelling) areas of each individual apartment/flat, however if your building is arranged over 1-2+ floors, with shared access, a bin/bike store, maybe a lift or plant room, then the overall tax relief could be substantial.

Site acquisitions

If you have acquired a site that has existing buildings, there may be the possibility to claim on any existing plant and machinery. A specialist survey would be required to undertake an apportionment of the purchase costs to identify the value of the qualifying assets.

If you are in the process of negotiating a deal, it would be worthwhile involving a specialist in the transaction, as they can provide any upfront advice that is required, in respect of any supporting elections / contract wording etc.

For an historic acquisition, a specialist will be able to investigate the history of the property to determine whether entitlement exists and the potential next steps.

Land Remediation 150% Relief

In highly populated areas where green space is hard to come by, it often can be expected that some land clearance may be required, as part of the redevelopment works.

Where a company incurs costs (including associated fees) on removing any contaminants from the land, such as asbestos or Japanese Knotweed (plus other pollutants), then the company may be entitled to 150% first year tax relief allowance.

This relief is available to UK companies (and developers) that have incurred the remediation expenditure (subject to meeting the entitlement criteria).

Redevelopment expenditure

Similarly, where an investor has incurred costs on redeveloping and fitting out the building, this expenditure can be analysed for capital allowances purposes, to determine the tax relief available (note that the dwelling restrictions still apply).

Tax relief will not be available on any structural elements of the property, but relief will be available for any plant and machinery installed including services and furnishings located within the communal areas.

How we can help

MJS Tax has a specialist team made up of Chartered RICS Surveyors and Tax professionals who have years of experience in this area of tax relief.

If you would like to explore this further and to see how we could help to support you in optimising this tax relief, please contact Phoebe at – phoebe@mjs.tax or call 01666 829 341 / 07961 580 250