5 Flashcards
What are the different categories of expenditure
Plant and machinery
Integral features
Patents know-how and scientific research
Structures and buildings allowance
What are chargeable periods
Following accounting period (unless period is longer than 18 months)
Capital allowances are treated as an accounting expense so calculate allowances then deduct from profits and then work out how much will be taxed each year
What is plant and machinery Yarmouth V France
Must be apparatus
Must be used by claimant in carrying on his business
Must be kept for permanent use in business
What items are statutorily deemed as plant
Thermal insulation for an industrial building
Equipment to comply with fire regulations
Safety regulations at sports grounds
Assets necessary to safeguard personal security
Computer software
Building alterations incidental to installing plant and machinery
Expenditure on integral features of a building or structure
What are leases bought under a term of more than five years treated as
Hire purchase
What is the cost of capital allowances if business cannot reclaim VAT incurred on purchase of assets
VAT inclusive price
What happens to capital allowances on a hire purchase
Can be claimed when contract has started
What are pools of expenditure
Items are grouped together and an allowance is calculated for all items included in that pool
What are the 2 pools of expenditure
Main pool and special rate pool
What is a balancing charge
Negative allowance and is added to accounting profit to arrive at taxable profit. Given when sale proceeds exceed pool value. May arise during trading but more common when trade ceases or is sold
What are non-pooled assets
Assets with some private use
Short life assets
Leased assets
How are assets with private use treated
Keep all items separate
Tax as normal but disallow part of allowance
There are no restrictions on any asset with private use by employee and is dealt with via benefits in kind legislation
How are short life assets treated
Can be made for any asset except cars, ships or assets leased out
Election needed
Disposed of within 8 years of end of AP of purchase however if still owned at that time, transfer to pool
How are leased assets treated
Kept in separate pool but have same rate of WDA as assets owned and used by business
