There is substantial worth of tax allowances within private member clubs. Significant savings can be achieved by considering capital allowances at an early stage. In-house accountants and tax advisors will be able to identify the apparent qualifying items of plant and machinery (P&M), such as furniture, kitchen equipment etc. When fitting out or refurbishing a member club, the construction expenditure is generally not very well detailed for capital allowances, therefore not easily recognisable by the accountants and tax advisors. The club owners may be provided with a high level summary of construction costs, where a non specialist may not have the appropriate expertise to fully segregate and allocate these costs to qualifying items of P&M.

The construction expenditure typically comprises qualifying P&M such as heating and cooling systems, electrical services, sanitary fittings, lift, food hoist, hot and cold water services etc. However there are descriptions such as ‘carpentry’ which may include eligible items such as bar counters, moveable partitions and banquette seating, as well as skirtings which attracts no allowances. A specialist with both tax and surveying skills will be able to distinguish these qualifying items of P&M and segregate these costs to plant and machinery allowances (PMA) and repairs. In addition, there are further less obvious qualifying items of P&M found primarily within a private member club, which include:

  • Trade drainage
  • Builders work in connection with mechanical and electrical services
  • Acoustic and thermal insulation within existing buildings where provided
  • CAA 2001 s.25 incidental costs such as works to lift and food hoist shafts within existing buildings
  • Machinery to automatic doors
  • Splashbacks behind cookers and sanitary fittings

Expenditure to Create Ambience

Furthermore, expenditure will be incurred on providing qualifying items of P&M that create ambience. There is no defined list that states what ‘ambience’ qualifies as P&M. Many items have become allowable through case law and are trade specific. IRC v Scottish & Newcastle Breweries Ltd (1982) 55 TC 252 was a significant case to consider ambience. The taxpayer was able to claim allowances on decorative assets such as wall plaques, sculptures and tapestries. They were not merely part of the setting but performed a valuable function. Therefore where ambience is of importance to the trade, such as in hotels, restaurants and private member clubs, the definition of qualifying P&M is wider than an office building. It can often be a complicated exercise as the tax case law in this area is still developing. Therefore it is necessary to engage a specialist to identify and maximise the PMA claims. Qualifying items may include:

  • Artwork
  • Decorative assets
  • Specialist finishes


For a refurbishment project, some repairs expenditure such as wall sandblast and cleaning, redecoration and window repairs are not very well detailed thus overlooked. There could be 15% or more expenditure that qualifies as repairs. It is essential to consider the accounting treatment for repairs at an early stage.

Enhanced Capital Allowances (ECA)

There may be scope for 100% allowances for green plant such as lighting and air conditioning, electric hand dryers, fridges and water efficient toilets. The ECA Scheme lets businesses that invest in certain energy-saving equipment specified on the Energy Technology List (ETL), write off the full cost of the compliant equipment against their taxable profit in the first year providing 100% tax relief.  These would otherwise attract the lowest writing down allowance at 8%. Early involvement of a specialist will facilitate in maximising ECA claims by drawing attention of these allowances to the project team.

Acquiring Existing Properties

When acquiring second hand properties, often no allowances are claimed or allowances available are restricted to a tax election figure included in the purchase agreement. Where a tax election is agreed on the acquisition, there may still be opportunity to increase the allowances. Tax elections only relate to fixtures, hence there is scope to claim more allowances for chattels. It is essential to engage a specialist to provide appropriate contract wording to protect your tax position at offer-letter stage. A specialist also has the expertise to quantify and allocate a proportion of the purchase price to qualifying items of P&M.

Lease Premium

There could be scope to allocate a proportion of the premium paid to capital allowances for the acquisition of the long leasehold interest. When assigning leases, it is essential to engage a specialist to get early capital allowances advice and adequate wording at the Head of Terms/offer-letter stage. If you can get agreed wording in early, there is less ambiguity for the lawyers to argue about later.

Landlord Contribution

There could be scope to allocate a proportion of the landlord contribution paid to capital allowances.  As mentioned above, getting early specialist advice and wording for inclusion in the contract to protect your capital allowances position is fundamental.


We are generally able to significantly increase the allowances, when we are involved at early stage and carry out detailed cost assessments. For fit out or refurbishments works, up to 90% of the expenditure is likely to attract allowances. For existing property acquisition, typically allowances may be claimed up to 20% of the purchase price.

Recommended Approach

It is important to obtain specialist capital allowances advice at an early stage before opportunities are missed. Lovell Consulting have a highly skilled and expert team, dual qualified in surveying and tax. Therefore we have the expertise to identify unusual items of qualifying P&M, as well as allocating value to qualifying P&M items where no comprehensive construction information is available.

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