Section 198 Election Advice

An election under Section 198 of the Capital Allowances Act 2001 is a joint agreement between the buyer and seller of a commercial property which fixes the value of fixtures and fittings included in the sale. These are items which form part of the fabric of the property on which Capital Allowance claims could be made. There are formal processes to follow, and various conditions which must be satisfied. For instance, one requirement is that the amount to be agreed by election cannot exceed the original cost. Additionally, the joint election must be submitted to HMRC within 2 years. Buyers could lose entitlement to a substantial element of Capital Allowances (and therefore valuable tax relief) if a valid election is not entered into.

• Drafting and negotiating the election values – We prepare and review Section 198 elections to ensure that they are accurate and fully compliant with tax law. We also assist in negotiations to agree on an appropriate election value and undertake calculations for both sellers and buyers to ensure that they are fully aware of the tax impact.