+44 (0) 20 7329 1300

Capital Allowances within Nursing Homes

Introduction

Nursing homes have substantial imbedded plant and machinery (P&M) items and repairs. However the less obvious items often get overlooked by accountants and tax advisors.

Why does this happen?

There are many obvious items of plant such as loose furniture and fittings which accountants can easily identify and segregate to allowances. However there are additional imbedded trade related items of P&M that are harder to identify. It requires a specialist to breakdown these costs and separate qualifying and non qualifying items.

Most new build nursing homes use design and build contracts for construction. The by-product of choosing this procurement route is the lack of detailed cost information. Typically clients will only receive a high level summary sheet of costs with no further details such as description “Carpenter”. To maximise total allowances by breaking down and allocating values to P&M from high level figures, a specialist with both tax and surveying knowledge is ideally required.

For instance carpenter may include fixtures and fittings joinery items which are qualifying as well as non qualifying skirting. This distinction can predominantly only be identified by specialists who can correctly segregate costs.

18_effa564737333a8dcf0fe5f68f8991e3_0

Typical P&M within Commercial Properties

Some examples of qualifying P&M that are found in nursing homes include carpets, security alarms, lifts and hot and cold water installations.

Unusual P&M within Nursing Homes

There are further qualifying items of P&M that are predominantly found within nursing homes. Significant additional allowances can be obtained. Examples include:

  • Trade drainage
  • Dado mobility rails that are usually not clearly distinguished in cost documents
  • Specialist sluice and sanitary equipment
  • Specialist dementia equipment
  • Safety equipment such as window restrictors
  • Builders work in connection with mechanical and electrical installations
  • Machinery to automatic entrance doors

pressalit

 Enhanced Capital Allowances (ECA)

The government has actively encouraged businesses to be more environmentally friendly. The introduction of ECA has provided business owners a greater incentive to promote their energy efficient credentials.

If items of P&M meet the Carbon Trust’s energy efficiency criteria, the full cost of these items can be written off in the first year providing 100% tax relief. The alternative would be (in most cases) tax relief at 8% per annum on a reducing balance basis.

For nursing homes, where construction of modern new build homes could cost in excess of £3 million, the cash flow benefit to install ECA compliant plant is quite significant.

For example newer nursing homes could have qualifying combined heat and power systems. These systems are expensive to install and maintain. Yet the whole system can qualify for ECA but it requires pre-registration with the Department of Energy and Climate Change. For the uninformed taxpayer, this process can be difficult to navigate.  A specialist can help with this to ensure ECA can be fully maximised.

Other examples of P&M that can attract ECA include LED light fittings, heating and cooling systems and electric hand dryers.

Repairs

Where a nursing home is refurbished, expenditure on redecoration and roof repairs is often not nicely segregated. A specialist can carefully segregate to exclude improvement expenditure. For a nursing home refurbishment there could be 30% or more expenditure that qualify as repairs. It is important for repairs to consider the accounting treatment at an early stage.

Nursing Home Capital Allowances Benchmarks

As shown there is great scope to identify additional allowances in nursing homes. It is reasonable to expect 20-40% of the purchase price of the home to be allocated to plant and machinery allowances (PMA), depending on the prior tax history. This will substantially increase if a refurbishment or fit out has been undertaken where 70-90% of total expenditure may qualify for PMA and repairs.

ellesemere_nursing_home_071110_8

Recommended Approach

It is recommended to use a specialist capital allowances firm to extract all the available allowances. Lovell Consulting can identify the hidden gems as well the slightly more unusual items of qualifying plant.

We can also add significant value where information is missing or difficult to obtain. As a dual qualified team in tax and surveying, we are able to break down costs and value qualifying items. This means that it is not necessary to have perfect information.

Back to News

OTHER NEWS

john

OTS Review on Capital Allowances and Accounts Depreciation

Lovell Coffee Seminar Oct, 1 and 15 Nov 2017

New Capital Allowances CPD Semimar Dates

EGA_220717_301_REV

20 Years of Capital Allowances

20170719_133055

Lovell Consulting Capital Allowances Student Prize Winner 2017

Lovell Coffee Seminar Sep, Oct and Nov 2017

New Capital Allowances CPD Seminar Dates

Cabot_Square,_Canary_Wharf_-_June_2008

Pension Funds and Capital Allowances Interactions

lexis

Lexis Nexis Webinar – Capital Allowances in 2017

Lovell Coffee Seminar May and June 2017

New Capital Allowances CPD Seminar Date & Speakers Announced

Kaca_film_40%

Capital Allowances and Demountable Partitions; To Move or Not to Move?

1966_Sunliner_caravan_(6262976143)

Employees Claiming Capital Allowances: Caravan Case Demonstrates Hurdles!

Midland_Hotel,_Morecambe,_Lancashire,_England-31Aug2010_(3)

Capital Allowances, Corporation Tax Loss Relief & Interest Deductions – Act Now

British_Houses_of_Parliament

Corporation Tax Loss Relief & Interest Deductions: Capital Allowances

Bar

New 2017 Capital Allowances CPD Seminar Dates Announced

1872042_8c5756ec

Capital Allowances, Trustees and Tax Havens

buildings-1245684_960_720

Interview: A Little Capital Allowances Knowledge Can Be Dangerous

3638890517_7161f4c331_z

MBL Seminar Dates Announced (Capital Allowances in Retail, Hospitality & Offices)

new-picture-56

2016 Lovell Consulting Capital Allowances Art Prize Voting Begins

1

Capital Allowances in the Retail Sector

Palm with a plant growng from pile of coins

Free Cash, Tax Savings & Capital Allowances for SMEs Going Green

2276927_4f106630

Student Accommodation & Capital Allowances

blake-h-portrait

Lovell Consulting Capital Allowances Student Prize Winner 2016

pexels-photo

Capital Allowances within Offices

MBL Webinar

MBL Webinar – Capital Allowances for Property Surveyors

2414578731_82c451232d_b

Capital Allowances & Data Centres

taxjournal-logo

Tax Journal Interview: One minute with…John Lovell, Capital Allowances Specialist

Odeon_Barnet,_High_Barnet,_EN5_(4497059063)

Claiming Capital Allowances and / or Repairs

york-united-kingdom-empty-street

Commercial Property Standard Enquiries: Capital Allowances

New Picture (54)

LexisNexis Webinar – Tax for General Practice & Capital Allowances

England1_144

Artful Plant: When Capital Allowances may be Claimed on a Painting

New Picture (44)

LexisNexis Webinar – Commercial Property Law & Capital Allowances

Thumbs_up_bluefilter

New Capital Allowances Team Appointment – Glenn Ramos

New Picture (48)

MBL Webinar for Property Lawyers and Tax Advisers (Capital Allowances)

Gherkin_stitch

Fundamental Changes to Interest Deductions & Impact for Capital Allowances

playground-99509_960_720 - Copy

Capital Allowances within Childcare Facilities & Schools

Royal_Coat_of_Arms_of_the_United_Kingdom_(HM_Government).svg

John Lovell Comments: 2016 Budget – Impact on Capital Allowances: Commercial Property

Thumbs_up_bluefilter

Capital Allowances Team Announcements

MamaMarseille

Better Call Lovell for Capital Allowances

0928aa_ee33b990a61e441d83d6b257a590d366

Lovell Consulting Capital Allowances 2015 Art Prize

Lexis

LexisNexis Capital Allowances Webinar with John Lovell & Ronak Shah

x-default

Plant in Garden Centres: Claiming the Right Kind for Capital Allowances

1280px-Serpentine_Gallery_Pavilion_5_(2732918169)

Can an Accountant Claim the Capital Allowances without Specialist Support ?

New Picture (33)b

John Lovell Capital Allowances talk at Chartered Institute of Taxation Conference

Albert_dock_at_night

Enterprise Zones & Capital Allowances

14228109324_186f38de00_o

Capital Allowances & Landlord Contributions to Tenant Fitting Out Works

wall-of-keys

10 Key Qualities To Look For In A Capital Allowances Advisor

aMaiFZY

Capital Allowances within Private Member Clubs

iStock_000005218304Small

Effective Dealing with HMRC for Capital Allowances

Taxation Feedback Article

Taxation Feedback: Capital Allowances

rooms+cover

Capital Allowances within Restaurants

Little Book

Little Book of Big Capital Allowances Savings

xglobal-REIT-ETF.jpg.pagespeed.ic.U54haEqpZd

Real Estate Investment Trusts: Get The REIT Advice on Capital Allowances

Siemens-6MW-Wind-Turbine

Wind Turbines and Capital Allowances

cont land

Contaminated Land – The Big Clean Up for Capital Allowances

New Picture (20)

Capital Allowances & Furnished Holiday Lets

CT_Lobby_01-of5a411

Capital Allowances Hidden Gems within Hotels

tax_1815371c

Helpful Tips for Claiming Capital Allowances in Tax Returns

Tax-question_300_2

Why Do I Need A Capital Allowances Specialist?

seedling

Land Remediation Relief & Capital Allowances Q&A

Inspired Capital Allowances Savings_Page_1

Inspired Capital Allowances Savings

580_Image_homes_new_oldham

Private Rented Sector (PRS) & Capital Allowances: Key Planning Points

london-6

Drafting For Purchase Contracts And CPSE Capital Allowances Responses

The Great Hall, University of Reading

Lovell Consulting Capital Allowances Student Prize Winner 2015

George Osborne Summer Budget 2015

Summer Budget 2015: Property Tax Updates & Impact for Capital Allowances

???????????????????????????????

The Benefits of Claiming Annual Investment Allowances

LN

Lawyers Should Seek Specialist Capital Allowances Advice

Lovell_Consulting_Groups22-1500w

The New Environment For Capital Allowances

Capital Allowances demolition costs

Capital Allowances – Demolition Costs

Capital Allowances - Asbestos Removal

Capital Allowances – Asbestos Removal

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary: Bowerswood House Retirement Home

wooden-judges-gavel-1024x678 (2)

Property Tax Case Summary: Terrace Hill (Berkeley) Ltd: Impact for Capital Allowances

OLYMPUS DIGITAL CAMERA

Business Premises Renovation Allowance (BPRA) Case Summary: Senex Investments

Construction Expenditure image

Capital Allowances Savings for Construction Expenditure

58767673

Recent Capital Allowances Case Study

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary – Rogate Services

crest(300x380)

Lovell Consulting Capital Allowances Student Prize Winner

wooden-judges-gavel-1024x678 (2)

Capital Allowances Case Summary – LLPs and AIA

Kirsty and Mike 2

New Capital Allowances Team Members

See Saw 2-10 (2)

Lovell Consulting Capital Allowances 2014 Art Prize

EGA_030514_301.indd

Recent Lovell Consulting Press Coverage: Capital Allowances

Lovell_Consulting_Groups05

April 2014 Capital Allowances Fixtures Rules

budgetbox_1107228c

The Budget of 19 March 2014 Announced a Number of Capital Allowances Changes

Lovell_Consulting_Groups22-1500w

Capital Allowances Case Update – The Granleys

Holiday Lets 2

Capital Allowances on Furnished Holiday Lets

wetherspoons-woking-01

Capital Allowances Case Update – Wetherspoon

budgetbox_1107228c

The Budget of 23 March 2012 Announced a Number of Capital Allowances Changes