Thanks for this great article on Fencing & Capital Allowances from Alex Murray, Community Coordinator – Safe Site Facilities – safesitefacilities.co.uk
Fencing sits in somewhat of a grey area when it comes to capital allowance. In order to qualify the fencing must fall under plant and machinery allowances of the 2001 Act. Standard fencing does not qualify under this act however where the fencing is for the purpose of security you may be able to make a claim, as detailed in the remainder of this article.
Fencing for Security
For anyone that has ever read anything in relation to capital allowances you will know there are many nuances to the law in this area and many criteria to meet in order to be able to claim an item under capital allowance. Fencing for the purpose of security is classified as a ‘security asset’ by the HMRC and can therefore be claimed as a capital allowance.
Security fencing can be temporary or permanent without affecting your right to claim however the caveat here is that it must be for personal rather than property security. Also note that any costs incurred for the installation of such fencing will not qualify for tax relief.
Business owners or partners, but not companies, are able to claim security fencing, along with other security assets, on personal property via capital allowance provided there is a ‘special threat’. Remember that security assets in this context are all about improving personal security rather than the security of your possessions. In general terms the HMRC classifies a special threat as an additional personal security risk brought about by your trade or profession.
Also note that fencing used for something other than personal security will only be available for tax relief on the appropriate portion deemed to act as a security asset. You can find more information on the use of security fencing on personal premises in this guide by Safe Site Facilities.
There is a widely cited (Mr PD, Mrs J & LD Brockhouse, 2011) case study pertaining to the use of fencing as a personal security asset that provides some insight into the possibility of claiming fencing as a capital allowance. It’s fair to say at the start that it all comes down to proving whether or not the fencing acts as a personal security measure or whether it simply provides property protection.
The company, who run an aquatics business selling fish, aquariums and related products, had claimed the palisade fencing installed on their property at a cost of £81,353 was for the purpose of protection against fish poachers. The fencing guarded an area of outside fish tanks and was previously surrounded by rapidly degrading timber fencing.
However it was concluded at a tribunal that a ‘special threat’ did not exist and the fencing had been put in place to protect the land and fish stocks with the result being that the fencing was not claimable under capital allowances.
This case study demonstrates the complexity of claiming a security asset, in particular fencing, as a capital allowance. The key it to demonstrate that the fencing provides personal security against an existing threat.