HMA Tax has raised concerns that developers converting buildings into student accommodation may be overlooking significant tax relief opportunities through capital allowances.
As UK universities grow their course offerings and student numbers, the need for additional accommodation continues to rise. Developers often refit existing properties to meet this demand, but many remain unaware that these refurbishments may be eligible for capital allowances.
“Many developers believe that residential conversions fall outside the scope of capital allowances,” Duncan Chittick (pictured), managing director at HMA Tax, said. “As this is not the case, we want to draw attention to it so that vital funding does not get missed.”
Capital allowances can be claimed on plant and machinery used in communal areas of multi-residential buildings, under HMRC guidelines. These include items such as lifts, access control systems, shared kitchens, laundries, and public area fixtures, all of which are typically found in student accommodation developments.
Chittick added: “It is only the items in communal areas that qualify, while fixtures within individual flats fall outside of the scope of the relief. Routine maintenance and repair work will also not qualify, so the capital allowances are more of a consideration for the initial conversion rather than the management of the property. Seeking professional help is the best way to maximise capital allowances while staying fully compliant.”
Older properties may also be eligible for relief on bespoke, heritage-style fittings installed during the conversion, provided the expenditure is wholly and exclusively for business purposes. HMA Tax advises developers to review the scope of eligible assets during the planning stage to ensure they do not miss out on valuable tax relief.
