Capital allowance

Question 1

Timing rules

Answer 1

The normal rule is that expenditure is incurred for CA purposes on the date on which the obligation to pay become unconditional. The legal obligation to pay usually arises on deliver of the P&M

Unless there is a gap of more than four months between:
the date on which the obligation to pay becomes unconditional
the date on which payment is require to be made

If so the expenditure is not incurred until the date on which payment is required to be made

Question 2

Deposit paid

Answer 2

CA can be claimed on expenditure which occurs under a contract proving the person incurring the cost shall or may become the owner on performance of the contract

Question 3

Hire purchase

Answer 3

Instalments paid - CA can be claimed when the person is entitled to the benefit of the contract
Brought into use - when the asset is brought into use all unrelieved capital expenditure is treated as having been incurred