Brokers lose over £6.5m in commission

Brokers lose over £6.5m in commission




According to Catax Solutions, UK commercial property agents have lost £6.5 million since the implementation of the 2012 Finance Bill earlier this year… .

According to Catax Solutions, UK commercial property agents have lost £6.5 million since the implementation of the 2012 Finance Bill earlier this year. 

Capital allowances specialists have analysed recent HMRC figures, finding that approximately 5,510* commercial properties were eligible for tax relief out of all properties sold since the Bill was introduced. 

It was stated that with the average commercial property in the UK selling for an estimated £500,000, the agent which brokered the sale could expect to receive a commission of around £1,200 for a single transaction. 

However, as only one per cent of sales have had any relief claimed against them, it is estimated commercial agents have lost a staggering £6.5million in commission. 

Mark Tighe, Managing Director of Catax Solutions said: “Just as commercial property owners can’t afford to be missing out on sizeable tax rebates, agents can’t afford to miss out on commissions that could potentially be the difference between the success and failure of their business.

Catax worked out the statistic as follows using an average property price of £500,000: 

1. Purchase value £500,000 x 5,510 property transactions = £2,755,000,000 in property
2. £2,755,500,000 x (conservative) 20 per cent Capital Allowances identification = £551,000,000 
3. Then £551,000,000 x average agents commission 1.2 per cent = £6,612,000 
4. Approx 1 per cent of commercial properties are estimated to have had capital allowances identified, therefore 99 per cent x £6,612,000 = £6,545,880

It was also found with the average commercial property transaction resting at around £4,000,000, a commercial property agent could be foregoing a colossal £9,600 for every deal.

Mark Tighe, added: “While previously it was possible to recover that lost commission retrospectively, this is no longer an option. Legislation that came into effect in April included an expiry date on the time that capital allowances could be claimed. As a result, if they aren’t identified at the point of sale, they could be lost forever.”

 *The statistics were drawn from average UK property transactions eligible for capital allowance tax relief based on HMRC figures and Catax Solutions’ own estimates; from April 2014 to August 2014 inclusive. 

HMRC recorded 55,103 commercial property transactions in total, of which Catax estimate approximately 10 per cent, or 5,510, would have been eligible for capital allowances tax relief.
 

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