When you buy a commercial building, the price you pay is not just for bricks, mortar and land. A significant slice of it buys the fixtures embedded in the fabric: the electrical and lighting systems, the heating and air conditioning, the cold water and sanitaryware, the lifts, the fire and security installations and the specialist plant that makes the building usable. Those fixtures qualify for capital allowances in their own right, yet on most purchases nobody ever claims them. The value is not broken out on the completion statement, the solicitor is closing a conveyance rather than surveying plant, and the accountant is reading a set of accounts rather than walking the building.
This page is about the buying-and-owning side of that problem. It is the due-diligence guide for a commercial buyer or occupier deciding whether there is an unclaimed capital allowances claim inside a second-hand building, and how the purchase rules can either protect that claim or quietly destroy it. It is not a walk through the statutory categories of what counts as plant. For the full mechanics of the five integral-features categories and how the pools are calculated, see our guide to integral features capital allowances. Here the focus is the deal: what the fixtures are worth, why buyers miss them, and the two rules (the pooling requirement and the section 198 election) that decide whether you can claim at all.
What embedded capital allowances actually are
Embedded capital allowances, sometimes called fixtures allowances, are the plant and machinery that come attached to a building when you buy it. Unlike a desk or a forklift that you buy and can carry out of the door, these items are fixed into the structure. The law still treats them as plant, so they attract capital allowances, but because they transfer as part of the property rather than as a separate purchase, they are easy to overlook.
The qualifying fixtures split across two pools once identified. General plant and machinery goes in the main pool and is written down at 14% a year from April 2026 (reduced from 18% by Finance Act 2026). Integral features, which cover the electrical, cold water, space and water heating, ventilation and air conditioning systems, lifts, escalators and external solar shading, go in the special rate pool at 6% a year. The Annual Investment Allowance of £1,000,000 can turn qualifying expenditure into a 100% deduction in the year, and companies buying new plant may use full expensing at 100%. On a second-hand building, though, the fixtures you inherit are usually written down through the pools over time rather than expensed in one go.
The structure itself (the walls, floors, roof and land) does not qualify for plant allowances. The building shell may attract the structures and buildings allowance at 3% straight line if the construction expenditure qualifies, but that is a separate and much slower relief. The whole value of an embedded allowances claim is in correctly separating the fast-relief fixtures from the slow-relief structure.
Why most commercial buyers miss the claim
The claim is missed for structural reasons, not because buyers are careless. First, the purchase is a single figure. You pay, say, £1,500,000 for a building, and that number appears on the contract as one lump sum. Nothing in the paperwork tells you that £350,000 of it bought qualifying fixtures. Extracting that figure needs a survey and a valuation, which no one commissions unless they know to.
Second, the professionals involved are each looking at a different thing. The solicitor is managing title, searches and the transfer of ownership. The accountant is preparing accounts and a tax return from invoices and completion statements. Neither of them inspects the plant embedded in the building, and neither is a valuer. Capital allowances on a second-hand property fall in the gap between the two disciplines, which is precisely why a separate specialist exists.
Third, there is a persistent myth that you can only claim on what you build or fit out yourself. In reality, the buyer of a second-hand building can claim on the fixtures already in it, provided the entitlement was preserved through the purchase rules described below. The result of all this is that a large amount of legitimate relief goes permanently unclaimed on commercial transactions every year.
The pooling requirement: the trap that can extinguish the claim
The single most important thing to understand about buying a second-hand commercial building is that the claim is not automatically yours to make. Since April 2014, a buyer can only claim capital allowances on fixtures if a specific chain of conditions is met, and if it is not, the entitlement can be lost permanently for you and every owner after you.
The core rule is the pooling requirement. Where a past owner was entitled to claim capital allowances on the fixtures, that owner must have brought the expenditure into a capital allowances pool before or at the point of sale. If an entitled past owner simply never pooled the fixtures, a later buyer generally cannot resurrect the claim. This is not a timing inconvenience that can be fixed afterwards. It is a permanent loss of the relief, which is why the fixtures history has to be investigated as part of due diligence rather than after completion. HMRC sets out the pooling and mandatory-value conditions in its Capital Allowances Manual guidance on fixtures.
Not every building is caught. If no previous owner was ever entitled to claim (for example because the building was owned throughout by a party outside the charge to UK tax, or the fixtures were never within the allowances regime), the pooling requirement may not bite and a fresh claim can still be built. The point is that you cannot know which situation you are in without asking the questions, and the questions have to be asked while you still have negotiating leverage in the deal.
The section 198 election: fixing the value that passes to you
Where a seller has pooled the fixtures, the value that transfers to the buyer is not left open. It is fixed by a joint election under section 198 of the Capital Allowances Act 2001 (section 199 covers the equivalent on the grant of a lease). Both parties sign it, it must be made within two years of the sale, and the figure it states does two jobs at once: it becomes the buyer's qualifying expenditure for the fixtures, and it becomes the seller's disposal value that is set against their own pool.
The election figure can be anything from £1 up to the seller's original expenditure. That range is exactly why it matters. A seller who has claimed allowances and wants to avoid a large disposal charge has an incentive to agree a low figure, while the buyer wants a high one to maximise the claim. If the parties agree £1, the buyer walks away with almost nothing to claim on those fixtures, even though the building is stuffed with qualifying plant. The election is therefore a commercial negotiation, and it belongs in the pre-contract enquiries and the sale agreement, not in a conversation after completion when the buyer has no leverage left.
How the claim is valued: just and reasonable apportionment
Where there is no election dictating the figure, for example on an older building or where the pooling and entitlement position leaves the claim open, the qualifying fixtures have to be extracted from the single purchase price. The law requires this split to be made on a just and reasonable basis under section 562 of the Capital Allowances Act 2001.
In practice a specialist reconstructs the picture from the building itself. They inspect the property, identify every qualifying fixture, establish its replacement cost, and then adjust that figure to reflect the age and condition of the plant and the price actually paid for the whole property. The output is a defensible apportionment of the lump-sum price between the land, the non-qualifying structure and the qualifying fixtures. This is the part a general accountant cannot do, because it combines a physical survey, a valuation and a tax analysis. HMRC expects the apportionment to be evidenced and reasoned, not estimated, and a properly surveyed report is what stands behind the claim if it is queried. The HMRC Capital Allowances Manual sets out the approach HMRC applies to apportionment and fixtures.
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What a claim is worth by building type
How much of a purchase price sits in embedded fixtures depends far more on how the building is fitted out than on the label on the door, but sector is a useful first guide. A bare warehouse is mostly structure and holds little. A hotel or care home is dense with plant and holds a great deal. The table below gives typical claimable ranges as a share of the purchase price, with a link through to the detailed guide for each building type. Treat the percentages as starting expectations that a survey then confirms or corrects.
| Building type | Typical claimable range (share of price) | What drives it |
|---|---|---|
| Industrial units and warehouses | 5% to 15% (low) | Mostly structure; cranes, dock levellers, three-phase power |
| Offices | 15% to 25% (moderate) | Comfort cooling, raised floors, data cabling, lifts |
| Student accommodation (PBSA) | Low after the dwelling-house cut | Only communal areas qualify; study bedrooms are restricted |
| GP surgeries | Moderate to high | Clinical plumbing, cold-chain fridges; lease and entity nuance |
| Dental practices | 25% to 45% of fit-out (high) | Chairs, imaging, compressors, decontamination plant |
| Care homes | 25% to 35% (high) | Nurse-call, hoists, assisted bathing, lifts, laundry |
| Hotels | 25% to 40% (high) | Per-room sanitaryware, kitchens, lifts, air conditioning |
| Hospitality (cafes, QSR, leisure) | 25% to 40% (high) | Kitchens, refrigeration, bar fit-out, fast refit cycles |
| Pubs and restaurants | 25% to 40% (high) | Cellar cooling, dispense, kitchens, ambience assets |
The spread is wide because a warehouse and a hotel are different kinds of asset. A £1,000,000 warehouse might hold £80,000 of qualifying fixtures, while a £1,000,000 hotel could hold £350,000. If you want a quick indicative figure for your own building before commissioning a survey, our capital allowances calculator applies these ranges to a purchase price and pool split.
A worked example: the £1.5m purchase and the election trap
Take a buyer who pays £1,500,000 for a mixed commercial building, exchanges and completes, and gives the fixtures no thought. A specialist survey later identifies around £350,000 of qualifying embedded fixtures inside the price. Split across the main and special rate pools and set against a company's profits, that pool is worth roughly £87,500 in corporation tax at the 25% main rate over the life of the claim, and a chunk of it can come forward quickly if the Annual Investment Allowance is available in the right year. That is real money that was sitting inside a price the buyer had already paid.
Now change one fact. Suppose the seller had previously claimed allowances and pooled those fixtures, and at completion the parties signed a section 198 election for £1 because nobody on the buyer's side flagged it. The buyer's qualifying expenditure on those fixtures is now £1. The £350,000 claim has not been deferred, it has been extinguished, and no retrospective survey can bring it back. The difference between the two outcomes was not the building. It was a single question asked, or not asked, during the purchase enquiries. That is the whole case for treating fixtures as a due-diligence item rather than an afterthought.
Retrospective claims on a building you already own
The election trap only bites at the point of purchase. If your purchase preserved the entitlement (the seller pooled and elected a real value, or no past owner was entitled so the pooling rule never engaged) then there is no time limit on making your first claim for fixtures you still own. A building bought five or ten years ago can still yield a claim today.
A retrospective claim follows the same path as a claim at purchase. The specialist inspects the property, gathers the purchase documents and any historic election, quantifies and apportions the qualifying fixtures under section 562, and produces a report that you or your accountant use to amend the relevant tax return. The relief then comes through either as a refund of tax already paid within the open window or as reduced writing-down allowances against future profits. A single-building claim typically takes a few weeks from instruction to report, which is short against a benefit that regularly runs into tens of thousands of pounds.
Getting the claim right: use a surveyor-led specialist
Embedded capital allowances sit at the meeting point of tax law, building surveying and valuation, which is why they are handled by dedicated capital allowances firms rather than by general accountants. A specialist does three things a normal accounts function cannot: it physically surveys the building to identify every qualifying fixture, it produces a just and reasonable apportionment that will stand up to HMRC scrutiny, and it manages the pooling and section 198 position on a purchase so the entitlement is protected rather than lost. Most of these firms work on a no-win, no-fee or contingent basis, so establishing whether you have a claim, and what it is worth, costs nothing up front.
The trigger points are simple. If you are buying a commercial property, raise fixtures in the pre-contract enquiries and get the election handled before exchange. If you already own one and have never had a capital allowances review, have one done, because the relief does not expire while you still hold the asset. Either way, the review is worth commissioning purely on the arithmetic: a service-heavy building can hold a six-figure claim that no one has ever looked for.
To go deeper on the parts of this that have their own detail, see the integral features guide for exactly what falls into the 6% special rate pool, the structures and buildings allowance guide for the relief on the shell, and the sector pages linked in the table above for what a claim looks like in your specific type of building.