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PEFFs - how important are they to a capital allowance claim?

05 April 2022 : Industry News

After working with the Capital Allowance Review Service on a recent project (which you can read the case study for here) we sat down with Founder, Paul Roberts, to understand a little bit more about claiming capital allowances on plant and machinery.  

Plant and Machinery that’s just diggers and things, right? 

No, it's not just that! But I can understand why you think that and we do hear that a lot.  

Whilst the machine part may sound pretty self-explanatory and can include the obvious things like machines with working parts, motor vehicles, including those diggers you mention, and electronic devices, it can also be found in places which might be slightly less obvious, such as in door handles. 

Plant can be a little tricker to define and is defined by HMRC as ‘an apparatus used for carrying on the business, is not stock in trade, and is kept for permanent employment in the business’… put simply, functionality is a key consideration. 

How does that relate to PEFFs? 

Well, it all started with me asking the same question…

“I know you will have probably claimed your capital allowances but have you claimed your Property Embedded Fixtures and Fittings?”

Realising that was quite a mouthful, and to get people thinking about what actually is involved, we changed it to PEFFs. 

The reason for my question was the realisation that whilst capital allowances are regularly identified on the ‘movable’ elements, the ‘immovable’ items within a property were often missed and the client wasn’t aware of this. 

Immovable items, they don’t sound too difficult to find? 

They’re better at hide ‘n’ seek than you’d think. The reason? The FF of PEFFs is Fixtures and Fittings and these are the often-overlooked items that aren’t always discovered in routine checks. 

1.    Fixtures 

Capital Allowances - Fixtures

2.    Fittings – or otherwise known as ‘integral features’ 

Capital Allowances - Fittings

If these items don’t come up in an accountant’s search, the tax benefit can be lost forever. 

So, there might be hidden treasures in my property? 

Yes, but it can take a real comprehensive search to make sure everything is found. We worked with a client who had gone through the usual routine but felt they were missing something. 

Their feeling was right as we managed to find over £370,000 unclaimed PEFFs in a building that qualified for tax relief, which when applied to a client’s tax profile, secured a total tax saving of just under £150,000! 

How? We followed our process and visited the property which helped identify the embedded items which weren’t available within the paperwork. To say the client was delighted would be an understatement. 

Who can make the claim? 

If you own or rent a building you can claim, but the claim must be made by the person who bought the item. When purchasing a building it’s important to agree the value of any fixtures and fittings with the seller, otherwise you won’t be able to claim for them. 

Thanks Paul, where can we find out more about PEFFs? 

You can find out more about PEFFs and the tax benefit available on our website. 

How we can help? 

This is just a brief outline of what’s covered within a much more exhaustive list, so this is why we recommend expert help when it comes to discovering what capital allowance claim you may have. 

If you’d like to talk it through with us and get some initial advice on the next steps, please give us a call on 01782 279615.

https://www.gov.uk/capital-allowances/what-you-can-claim-on

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca21010

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