The changes, which come into force in April, mainly affect purchasers of second-hand commercial buildings and their entitlement to claim tax relief in the form of capital allowances on qualifying fixtures and fittings.

Capital allowances are valuable tax reliefs available in respect of expenditure on plant and machinery including “fixtures” forming part of a building, such as lifts, air conditioning, heating and sanitary ware.

From April, capital allowances will only be available on the purchase of second-hand fixtures if a previous owner had “pooled” the relevant expenditure for capital allowances purposes in a chargeable period when they owned the property. “Pooling” means properly identifying the fixtures and recognising them in the seller’s expenditure pool qualifying for capital allowances; although the seller does not have to actually claim allowances.

The pooling requirement will only apply to a seller who was entitled to claim capital allowances and not to a non-taxpayer such as a charity or pension fund or to a seller holding property as a trading asset.

This significant change will apply to property (other than new buildings) acquired by corporate tax payers on or after April 1, and individuals on or after April 6.

Where a building containing qualifying plant and machinery is purchased, and capital allowances are available to the purchaser, the amount of allowances will depend upon the price paid by the purchaser and the value agreed for the fixtures. The new pooling requirement is in addition to the requirement that has applied for property acquired since April 2012, that the seller and purchaser must make an election within two years from the date of completion setting out the amount of the sale price attributed to the fixtures, or, if they cannot agree, apply to the tax tribunal to determine the value.

We, at JWPCreers chartered accountants, advise you to seek professional advice as soon as a second-hand property transaction is identified.