Integral features: building components that qualify as plant

1. The statutory list

Integral features are defined by section 33A of the Capital Allowances Act 2001. The list is closed, only items on the statutory list qualify, and consists of:

• Electrical systems (including lighting)
• Cold water systems
• Space or water heating systems
• Air conditioning and air cooling systems
• Powered ventilation and air purification systems
• Lifts, escalators and moving walkways
• External solar shading

2. Rate and pool

Integral features sit in the special-rate pool. Writing-down allowances on that pool are at 6% per year on a reducing balance basis, slow relief compared to the 18% main pool, but still materially better than the 3% SBA rate that would apply if the items were buried in a general building cost.

Integral features qualify for AIA at 100% up to the annual £1 million cap. They also qualify for the 50% first-year allowance under the Full Expensing regime, for companies buying new integral features. A £200,000 integral features spend inside AIA headroom delivers a £200,000 deduction in year one; the same spend funded on a writing-down basis at 6% takes more than two decades to fully relieve.

3. When you buy a building

Buying an existing commercial building is the single biggest integral-features opportunity most buyers miss. Embedded in the purchase price is a mix of land, building shell, and integral features. The features have been there since the building was constructed, heating, electrics, lifts, air conditioning, and a portion of the purchase price is economically for those features.

A formal capital allowances review on the purchase can identify and value the integral features content, creating a substantial writing-down pool from the purchase price. For a £1 million commercial property purchase, the integral-features element is often £100,000 to £200,000, and if not identified at the point of purchase, the relief is typically lost because the pool allocation is not made.

4. New build and fit-out

In a new-build or major fit-out, integral features are typically itemised in the builder's invoices or M&E schedule. The analysis exercise is mechanical: extract the integral features cost from the total construction cost, direct it to AIA or the 50% FYA, and run the remaining shell cost through SBA at 3%.

Where the invoice is not itemised and there is only a single "construction cost" figure, the cost can be apportioned on a reasonable basis, typically with reference to the M&E schedule, the bill of quantities, or benchmarks for similar buildings. The apportionment needs to be defensible, not optimistic: HMRC will query generous splits.

5. Section 198 Elections

On the sale of a commercial property, the buyer and seller can make a joint election under section 198 CAA 2001 to fix the value of the integral features in the sale price. The election matters because it determines the buyer's opening pool balance, and, by the same arithmetic, the seller's disposal value for balancing purposes.

The election must be made within two years of the transaction. Without a section 198 election, the seller is deemed to dispose at market value (usually unhelpful) and the buyer may not be entitled to claim allowances at all under the fixtures provisions. Legal packs on commercial property sales should always flag the section 198 question; if they do not, ask.

6. The capital allowances review

A capital allowances review on a commercial property purchase, construction project, or major fit-out produces a formal report identifying qualifying expenditure, classifying it into pools, and supporting the CT return entries with a defensible analysis.

The review pays for itself in almost every case where the transaction involves an existing commercial building or a substantial new-build construction cost. The ROI is typically many multiples of the fee. What is not defensible is not doing the review and leaving the relief on the table, or worse, burying it in SBA at 3% for 33 years when AIA could have delivered 100% in year one.