Capital Allowances Flashcards
What are the 3 pools for capital allowances?
Single asset pool
Special rate pool
Main/General pool
How is VAT treated for capital allowances
Exclude claimable VAT
Is pre trading capital expenditure eligible for capital allowances
Yes, treated as incurred day 1
What assets qualify for first year allowances (FYA)?
New 0 emissions goods vehicles
New P&M used within in enterprise zone within 8 years of establishment
Electric charge points before 06/04/23
New 0 emission cars before 31/03/25
New 1-50 emission cars before 06/04/21
Research and development expenditure excluding land
Main pool
WDA %?
Time apportionment?
Which cars are included?
18% WDA
Time apportioned
Cars 1-50 emissions(51-110 b406/04/21)
Second hand 0 emission cars
Special pool
WDA %?
Time apportionment?
What is included?
6% WDA Time apportioned Long life assets Integral features Cars >50 emissions (50-110 before 06/04/22)
What is a small pool and how is it treated?
Pools less than £1000 are classified as small and the whole amount can be written down
The £1000 needs to be time apportioned
What is classified as integral features(IF)?
Electrical systems Cold water systems Space or water heating systems Air systems (ventilation/air cooling) Lifts/escalators/moving walkways External solar shading (External rebuilding/replacement of IFs if repairs >50% of full replacement)
What is defined as a long life asset?
Which pool?
Which assets are excluded?
Plant and machinery >25yr life expectancy when new 12 month expected expenses > 100k Special rate pool Less than 100k expenses general pool Cars/ships/ Used in retail/showrooms/offices/hotels/houses
Annual investment allowance (AIA) What is it? How much is it? What is it available on? Most tax efficient allocation?
An allowance on P&M bought in the year giving full tax relief on cost
AIA is currently 1 million
Available on any P&M except cars
Allocate to special pool first as this has a lower tax written down relief on the remaining balance
Time apportionment
AIA?
WDA?
FYA?
AIA - time apportion
WDA - time apportion
FYA - never time apportion as no limits
Disposals treatment
General/special pool?
Single asset pool?
Deduct lower of proceeds and cost before WDAs
Balancing charge if negative balance
Balancing allowance can only occur on cessation
Single asset deduct lower of proceeds and cost
Balancing allowance if balance remains
Balancing charge if negative
Single asset pool
What assets are these for?
Explain the treatments of each?
Private use assets - (by owner not emp)
Calculate WDAs and balancing charges as normal
Only allow for the business element
Carry forward
Short life assets same as above with no business element split
What is a short life asset?
When is a depooling election to be made?
What happens after the asset is no longer deemed to be short life?
Expected use<8yrs Election to be made: Second 31st Jan after tax year 2 years after end of accounting period After 8 years move back to general pool
What is the process for capital allowances on cessation?
Add any additions
Deduct disposals
Balancing adjustment on each pool to nil
