Capital allowances specialists Catax Solutions have warned that the introduction of the 2012 Finance Bill last week means millions could be lost in tax relief, following new research that shows the hospitality sector claimed more than £24m in capital allowances in the 2012/2013 tax year.
It says this is because the new legislation means that unless property vendors identify and document capital allowances at the point at which capital properties are bought or sold, they will be “lost forever”.
Catax Solutions managing director Mark Tighe said: “Unless more people sit up and take note of the legislative changes that are now upon us, Britain’s commercial property owners will be haemorrhaging tax relief in the coming financial year — and every year thereafter.”
Concerns have also been raised about changes to the Working Families Tax Credits (WFTC), which will be transferred to Universal Credit (UC) between April 2014 and October 2017.
Association of Licensed Trade Accountants (ALTA) chair David Jones said publicans will be seriously affected by the new rules, which means they will have to complete an online questionnaire to prove their business is “gainful”. If it isn’t, the publican must look for, and be available for, additional work or lose the claim, Jones said.
He also warned that publicans with £16,000 capital (including savings and property values) will not be able to claim, and those holding capital of less than £16,000 may receive reduced claims.
Jones said: “The UC income rules assume that self-employed people earn the minimum wage for 35 hours per week. This is called the Minimum Income Floor (MIF) and is £221 per week (£11,484 pa) from April 2014.
“Currently there is no MIF so landlords earning less than this or making losses will lose this financial support, which could precipitate their exit from the pub.”
He added that the income reporting process is also “far more onerous” and the new rules suggest “a lack of understanding of the concept of self-employed income”.
The Government, however, has claimed that a ‘typical’ pub with a rateable value of £10,000 could get 30% extra off their tax bill after changes to business rates.