Preparing your care home for sale

If you are, I’m sure you will also be considering how you can best present your asset to the market, but by this you are probably considering not only the profit & loss account but also the physical building.  I suspect you are not considering getting your “capital allowances house” in order in preparation for going to market. 

If you have previously claimed capital allowances for Fixtures forming part of the Property (we are not referring here to the loose fixtures, fittings & equipment or chattels which you will also be selling, and which are an entirely separate matter) you will need to ensure certain measures are put in place at the point of sale to protect yourself from any possible tax charge.  The best time to address this is firstly in the sale brochure/particulars, and then in any heads of terms agreed with a Buyer, which then follow through to the sale and purchase agreement.

If you have not previously claimed capital allowances for Fixtures, then the question to ask yourself is do you want to?  If so, then it is not too late, as an entitlement to claim capital allowances is not lost.  You can make your claim prior to sale and then take the necessary action at the point of sale as referred to above to retain them.

If you have not previously claimed capital allowances, and do not want to, then an entitlement to claim will pass to the Buyer on sale.  However, certain aspects of a Buyer’s claim are dependent on the Seller pooling qualifying expenditure and passing it on.  Some Buyers may consider a higher price where substantial capital allowances can be made available to them, particularly with the current incentives of annual investment allowances, the super deduction and the first-year allowance, or at least it may make your home more attractive to them than another one elsewhere.  Capital allowances could perhaps also be used to counter a price chip because of another issue.

There are many complex capital allowances issues to consider on sale, and many different permutations dependant entirely on the circumstances of the particular home in question, there is not a “one cap fits all” scenario.

Specialist capital allowances specific advice should be taken at the earliest possible stage in the sale process so as not to fall foul of some of the pitfalls and either suffer a tax charge on sale, not realise a better price or even perhaps lose a sale. Do not wait until the week of exchange to suddenly wake up and realise the capital allowances implications of the transaction!

JexCA Limited are a specialist capital allowances consultancy established in 1995 with a longstanding presence and expertise in the care sector.  We work closely with and alongside your solicitor and accountant as part of your team.  For an initial no obligation consultation please in the first instance contact Jonathan Jex at jpj@jexca.co.uk