Capital Allowances Flashcards
Capital Allowances: Long life assets definition
Plant and machinery
- With an expected working life of
Over 25y
AND
- Total cost in a 12m accounting period
Over 100k
(Can time-apportion)
Capital Allowances: Long life assets: What can’t be classified as a long life asset?
- Cars
- Ships
P&M used in:
a. Retail shops
b. Showrooms
c. Offices
d. Hotels
e. Houses
Capital Allowances: What should you first allocate the AIA to, in ortder to be tax effcient?
The SRP
Capital Allowances: Do you time-apportion the AIA?
Yes
Capital Allowances: Do you time-apportion WDAs?
Yes
Capital Allowances: Do you time-apportion FYAs?
No
Capital Allowances: Treatment when a trader CAN reclaim VAT on the asset?
Include NET of VAT
Capital Allowances: Treatment when a trader CAN’T reclaim VAT on the asset?
E.g. Cars
VAT INCLUSIVE
Capital Allowances: In the exam, should you assume VAT has been treated incorreclty?
No
Assume the correct VAT treatment has been applied
Capital Allowances: Short Life Asset definition
Expected to be used for less than 8y
Capital Allowances: What to do if a short life asset is used for more than 8y?
I.e. by the end of eight years after the end of the basis period (AP for companies)
Transferred to main pool
At TWDV
Capital Allowances: What to consider when I notice:
Commercial buildings/structures
Assets being built by the business itself
Structures and buildings allowances (OBT)
Capital Allowances: Does land qualify for structures and buildings allowances?
No
Capital Allowances: Does stamp duty qualify for structures and buildings allowances?
No
Capital Allowances: Do planning permission costs and professional fees qualify for structures and buildings allowances?
No
Capital Allowances: Main rule for structures and buildings allowances?
Must be non-residential use
Capital Allowances: Structures and buildings allowance: What to do if a building is partly used for trade and partly rented?
SBA apportioned
(Between trading profits and rental income)
Capital Allowances: Do buildings which function as dwellings apply for structures and buildings allowances?
E.g. student accommodation
Prisons
Military accommodatoin
Holiday lets
No
Capital Allowances: Is the SBA time-apportioned?
Yes
Capital Allowances: Do assets not yet brought into use apply for structures and buildings allowances?
No
Capital Allowances: Are capital allowances available on the cost of structures and buildings? (As well as SBA)
No
Capital Allowances: Are capital allowances available on the cost of plant and machinery? (As well as SBA)
Yes