Construction contractors working under the Construction Industry Scheme (CIS) are being urged to educate themselves about capital allowances, in order to claim the full amount of tax relief they are entitled to.
David Redfern, tax expert and founder of DSR Tax Claims, has discovered that many contractors are missing out on valuable financial advantages due to their lack of knowledge surrounding capital expenditure and HMRC’s capital allowances legislation, potentially losing out on thousands of pounds of tax relief per year.
He believes that this is mostly due to the complexity of the regulations, meaning that most contractors are discouraged from claiming for their plant and machinery expenditure.
Due to DSR Tax Claims’ ‘Knowledge is Power’ campaign, which ran throughout April and was intended to increase awareness of taxation legislation which could be of benefit to CIS contractors, Redfern has discovered that many construction contractors are missing out on key areas of tax relief due to their lack of knowledge surrounding HMRC’s capital allowance rules.
He stated that “most CIS contractors are aware of business expenses such as their mileage and subsistence costs, but far fewer are aware of the advantages that can be gained through capital allowances”.
He added that for many contractors, these advantages could be substantial due to the type of capital purchases likely to be made by those in the construction industry.
With CIS contractors being able to claim capital allowances on plant and machinery, including tools, as well as business vehicles such as lorries or vans, these large business purchases can have a significant impact on a contractor’s finances.
Redfern added that many contractors are unaware of the full range of items that can be considered under capital allowances, including integral features of business premises, such as lifts or air-conditioning units, as well as certain fixtures and fittings such as CCTV systems or kitchens and bathrooms.
He added that “the feedback we received from CIS contractors throughout our campaign suggested that many construction contractors find the topic of capital allowances daunting due to the complex nature of capital allowance rules – however, with the substantial sums often involved in large business expenditure, it would benefit many to seek expert advice on claiming their full capital allowances”.