An office refit is more than a fresh coat of paint, it’s an opportunity to unlock tax relief and improve cash flow when you plan the project with capital allowances in mind. Our aim is simple: help you turn complex rules into straightforward, actionable steps so your refit pays off operationally and financially.
Capital allowances: aim of the claim
Capital allowances let you deduct qualifying capital spend from taxable profits. For refits, the key mechanisms are:
- Annual Investment Allowance (AIA) – 100% relief on qualifying plant and machinery up to the annual limit. Note: partnerships can only claim AIA if all partners are individuals; if a company (or another partnership) is a member, AIA is not available.
- Full expensing (100% first‑year allowance) – available only to companies on qualifying new and unused main‑rate plant and machinery. Special‑rate assets may qualify for the 40% first-year allowance.
Advanced point: where partners include companies, HMRC confirms capital allowances restricted to companies (like full expensing) can be claimed in the ‘notional company’ computation for those corporate members, though AIA still isn’t available to such partnerships.
What typically qualifies in an office refit
- Integral features (special‑rate): electrical systems (including lighting), cold water, heating and ventilation/air‑conditioning, lifts, escalators, and external solar shading. These sit in the special‑rate pool unless you use first‑year allowances or AIA where eligible.
- Fixtures and fittings / plant (main‑rate): items like air‑con units, certain cabling, and moveable equipment depending on how they’re installed and used. Classification as fixture vs chattel matters for pooling and transfers.
- Furniture and equipment: desks, chairs, storage, IT equipment; usually main‑rate plant and machinery.
- Software and IT infrastructure: HMRC confirms computer software and rights can be treated as plant for capital allowances, noting interactions with the intangible regime for companies (e.g., you may elect out for capital allowances).
Eligibility wording
“New and unused” is strictly interpreted for full expensing and the 40% full-year allowance. HMRC’s 2025 update clarifies mixed‑use scenarios, only the new element qualifies if you combine new parts with second‑hand components; recycled parts forming something genuinely new can still meet the “unused” test. Accurate cost segregation is essential.
Planning your claim: practical steps that save tax
- Build cost segregation into the project
Ask contractors/quantity surveyors for a schedule that splits qualifying plant (main‑rate and special‑rate) from non‑qualifying spend. Don’t leave this until after the refit.
- Time your expenditure
The period you incur costs determines which allowances you can claim (e.g., first‑year allowances must be claimed in the period of purchase).
- Get VAT right
If you can reclaim input VAT, capital allowances are computed on the net of VAT cost; if you cannot reclaim, include VAT in the qualifying expenditure.
- Consider the Structures & Buildings Allowance (SBA)
Some building works may fall under SBA (currently 3% p.a. over 33⅓ years), but plant and machinery is excluded from SBA; you claim capital allowances instead. Coordinate both to optimise relief across the project.
Quick eligibility map (plain‑English)
Common “misses” we fix
- Treating integral features as repairs (losing first‑year or AIA reliefs).
- Not segregating mixed assets (e.g., combining new parts with second‑hand components and losing full expensing on the new element).
- Forgetting to adjust for VAT recoverability in the capital allowances calculation.
- Overlooking SBA where structural works don’t qualify as plant.
How HaysMac helps
Office refit projects move quickly, and capital allowances can get lost in the detail. We’ll help you take a structured, commercial approach from the outset, so you know what qualifies, what doesn’t, and how to build a robust claim without slowing the project down. The result is a clearer process, a stronger position with HMRC, and the best possible tax outcome from your investment.
- Pre‑contract reviews: We scope the refit, build cost segregation into the plan, and map allowances (full expensing/FYA/AIA/SBA) against your timeline.
- Classification & claims: We classify assets correctly (fixtures vs chattels; main vs special rate), prepare computations, and reconcile VAT treatment.
- Mixed partnership support: Where corporate members are involved we run parallel computations where corporate members are involved; document eligibility and risk posture.
Speak to our Partnerships team
HaysMac offers a comprehensive capital allowances review service. We also advise on structuring your project to take full advantage of available allowances and avoid common pitfalls, helping you maximise tax relief on your office refit.
Speak to our team today.
