An extension of a 100% tax relief known as Business Premises Renovation Allowance (BPRA) has been welcomed by RICS (Royal Institution of Chartered Surveyors) as it will help bring more vacant premises back into productive use and encourage new businesses to open across the North West, creating local jobs.
BPRA was originally introduced in April 2007 to provide tax relief on costs incurred in converting, renovating or repairing disused business premises. The tax exemption has now been extended for another five years (to 31 March 2017) and RICS say this extension is much needed to give more sole traders or companies thinking of opening or expanding a business, the opportunity to convert ageing property back into business use.
However, Brent Forbes, Director at Petty Commercial says a lot of property owners in the region are unaware of this allowance or unsure of how it works exactly.
“The vacant premises, or part of a building, must be in an ‘assisted’ area that qualifies for relief when the expenditure is incurred. The current list of qualifying areas is due to expire on 31 December 2013, when a new list will be agreed, so the first thing commercial property owners should do is check whether any properties they currently own or are looking to buy are located in an assisted area so they can take advice on claiming BPRA”, says Brent.
A full list of the assisted areas in the North West (including Liverpool, Bolton, Wigan, Oldham Cumbria and West Lancashire) is available on the Government legislation website: www.legislation.gov.uk under ‘The Assisted Areas Order 2007.’
Brent adds: “The premises must have last been used as a business, and specifically not used as a dwelling, in order to qualify for the tax relief. It also must have been empty for at least a year before works begin and the costs incurred must be on conversion or renovation work, together with any incidental repairs. Owners must be aware that the tax exemption will not be given if the building does not remain a business premises after the renovation works have been completed too.”
For landlords, the allowance will be treated as an expense of the property letting business. Those without a property business or a trade will be able to set the allowance against their other income. Property traders would not be incurring capital expenditure on conversion costs and therefore will not be able to claim.