When you’re running your own business, it’s worth taking every little bit of help on offer. Capital allowances can be claimed when you purchase essential assets that you use regularly in your business, including machinery, equipment, and vehicles. These are classed as ‘plant and machinery’, the cost, or partial cost, of which can be deducted from your profits before tax, reducing your obligations and increasing your profits.
Do Cold Rooms Qualify For Capital Allowances?
When considering whether cold storage rooms are eligible for capital allowances, it is necessary to distinguish between these assets and cold stores. The question is whether the structure can exist independently as a building (if any machinery or equipment is removed) or whether it fulfils specific criteria to be designated as a type of fridge; only cold stores are classified by HMRC as ‘plant and machinery’.
- Cold stores are industrial buildings that are used for manufacturing or processing and may house equipment or machinery intended for the purpose of cooling or freezing goods or manufacturing cold products.
- An industrial cold room, by comparison, is considered to be an insulated box – in effect, a structure with its own framework which also incorporates a refrigeration unit.
Therefore, a cold room that is positioned within a larger building would be classified as ‘plant and machinery’ as it is a key asset necessary for the operation of the business and would qualify for capital allowances. The building itself that houses the refrigeration equipment would not.
Ellerker v Union Cold Storage Co. Ltd 22TC195
The definition of a cold store was tested in the case of Ellerker v Union Cold Storage Co. Ltd, in which it was determined that a building that contained machinery for making ice could be classified as a ‘mill’ – a building where goods are treated or processed by machinery. Because the machinery could be removed and the building could, therefore, be used independently for other purposes, it would not qualify for capital allowances.
Easing The Burden On Your Business
If you’re planning to install a cold room on your premises, remember that you could claim capital allowances to relieve the burden of tax on your business – so long as the cold storage room fulfils the definition established by HMRC. At MTCSS we can advise about the range of cold rooms available to ensure they meet the needs of your business, so feel free to get in touch for more information.