Grant Thornton's survey published earlier this year noted the increase in income from overseas students in many of the UK's higher education institutions. Key to attracting these types of students is the availability and quality of the student accommodation. Student accommodation has also become increasingly attractive to investors and property owners and managers. Against this backdrop, Grant Thornton's student accommodation team has advised on a number of the UK and international transactions in this sector. In this brief article, we consider some of the key taxation issues that property owners, operators and investors have to consider when investing in this asset class.

Capital allowances and wear and tear allowances
Capital allowances give tax relief for the reduction in value of qualifying assets, which can be written off against taxable income of the business. However, with arrangements and layout of new build student accommodation increasingly satisfying HMRC's interpretation of what constitutes a dwelling, the level of expenditure which previously would have qualified for capital allowances has reduced significantly.