Capital Allowances Flashcards
assets are considered to be plant in general if
they perform an active function in the business
Classified as plant?
Moveable office partitioning designed to be as flexible as possible to meet changing demands of the trade
Yes
Classified as plant?
Free standing decorative screens in the windows of a building society designed to attract local custom
Yes
Classified as plant?
Dry dock which acted as a hydraulic chamber in which a variable amount of water could be used to raise and lower a ship
Yes - not just a shelter, but deemed essential part in operation of business
Classified as plant?
Swimming pool at caravan park which performed function of giving buoyancy and enjoyment to those using the pool
Yes
Classified as plant?
Light fittings, decor and murals in hotel which created atmosphere conducive to comfort and wellbeing of customers
Yes
Classified as plant?
Special display lighting
Yes
When are assets generally not considered plant
When they are merely part of the setting in which business is carried on
Classified as plant?
Ship used as floating restaurant
No - structure in which business was carried on, not apparatus employed
Classified as plant?
Stand at a football ground
No - setting / place where trade was carried on
Classified as plant?
False ceiling containing conduits, ducts and lighting apparatus in motorway services
No - not perform function but merely part of the setting
Classified as plant?
Shipfronts, tiles, water-tanks, staircases and raised floors in chain of restaurants
No - part o the premises/setting in which trade carried on
Classified as plant?
Canopy at petrol station
No - merely provided shelter not part of the means by which the operation of supplying petrol was performed
Classified as plant?
A building housing car wash machinery
No - functions as premises in which business carried out rather than apparatus functioning as plant
Machinery definitoin
All machines, motor vehicles and computers
Expenditure specified as qualifying for capital allowances on P&M (2)
Building alternations incidental to installation of plant and machinery
License to use computer software
Are capital allowances available for expenditure incurred to comply with fire safety regulations for business preemies made in response to notice from fire authority
No
Are capital allowances available for expenditure on fire safety equipment such as fire alarms and sprinkler systems
Yes
What is structure and building allowance
Capital allowance on new qualifying structures and buildings where contract for construction entered into after 29 October 2018
3% on straight line on qualifying costs once brought into use
What qualifies for S&B allowance
Commercial buildings
(Offices, retail and wholesale premises, factories, warehouses and care homes)
Structures - walls, roads, bridges and tunnels
Are student accommodation, military accommodation, prisons and furnished holiday lets qualifying for sba
No - residential properties functioning as dwellings
Capital allowances for sole trader/partnership are calculated for each…
Period of account
Calculated tax adjusted tp less capital allowance then apply basis period rules
Capital allowances for companies are calculated for
Each accounting period
Acquisition cost if VAT registered and VAT recoverable cost is…
VAT Exclusive price
Acquisition cost if VAT on input irrecoverable (e.g. car)
cost is VAT inclusive price (net cost to business)
Acquisition cost of new asset acquired in part exchange transaction
Part exchange + cash
Acquisition cost of personally owned assets bought into business
Market value when brought into business
Acquisition cost of assets bought on hire purchase
Treated as bought for cash price excluding interest at the date of hire purchase agreement, instalment dates irrelevant
Disposal value is usually
Sale proceeds of asset not exceeding original cost
Disposal value if given away/sold for less than market value
Market value on date of disposal
Disposal value if asset scrapped / destroyed
Scrap value/compensation
Conditions for capital allowances on fixtures when purchased from seller who has previously used them in trade
Seller must either claimed FYA or have allocated them to a capital allowance pool prior to sale
Value of fixtures must be formally fixed in most cases by joint election by seller and purchaser which specifies amount of sales proceeds to be allocated (election must be made within 2y of transfer) value allocated cannot exceed original cost
Cars with emissions less than 50g/km are in the
Main pool
Cars with emissions greater than 50g/km are in the
Special rate pool
New cars with zero emissions and electric cars are in the
FYA pool - 100% FYA
All machinery, fixtures and fittings and equipment are in the
main pool
Vans, forklift trucks, lorries and motorcycles are in the
Main pool
Second hand zero emissions cars unless partly privately owned by sole trader/partner are in the
Main pool
Qualifying R&D expenditure is in the
FYA pool - 100% FYA available
New and unused low emission cars where expenditure incurred up to 31 March 2025 are in the
FYA pool - 100% FYA available
New and unused zero emissions goods vehicles where expenditure is incurred before 6 April 2025 (1 April for companies) are in the
FYA pool - 100% FYA available
Electric charge point equipment before 6 April 2023 (1 April companies) is in the
FYA pool - 100% FYA
For companies - new and unused plant and machinery in an area is a designated assisted area within an enterprise zone
FYA pool - 100% FYA - expenditure incurred in eight years from date of enterprise zone being establsihed
AIA cannot be used against
cars, strucutures and buildigns
AIA before 1 Jan 2019
200k
AIA1 January 2019 - 31 march 2023
1million
air after 1 April 2023
200k
Long life assets are in the
Special rate pool
Integral features are in the
special rate pool
Thermal insulation is in the
Special rate pool
Solar panels are in the
Special rate pool
Cars with CO2 emissions > 50g/km are in the
Special rate pool
Plant and machinery is classed as a long life asset if
- Has when new an expected economic working life of 25 years or more
- Total expenditure on this kind of asset exceeds £100,000 in the 12 month accounting period (if not add to main pool)
Long life asset treatment does not apply to
Motor cars
P&M used in retail shops, showrooms, offices, hotels, dwelling houses
ships
Electrical systems are identified as
Integral features
Cold water systems are identified as
Integral features
Space / water heating systems, powered systems of ventilation, air cooling or purification and any floor/ceiling comprised in such systems are identified as
Integral features
Lifts, escalators or moving walkways are identified as
Integral features
External solar shading is identified as
Integral features
Expenditure on substantial rebuild/replacement of integral features will be
allocated to special rate pool and not allowed as revenue deduction if represents more than 50% of full replacement costs
Small pool limit
if balance on main pool after additions and disposals is less than £1000, WDA can be claimed
pro rata
What kind of assets are given separate pools
Assets with private use by sole trader/partner
short life asset
If short life asset has not been disposed of by the end of xx after the end of the basis period, it is…
eight years
Transferred from separate pool to main pool
On cessation, any assets taken over personally by the owner are treated as
Sold for market value
SBA does not include
Land, planning permission, fees and stamp duty
Residential property/buildings which function as dwellings
SBA rate
3%
SBA Amount if built
cost of physically constructing S/B including costs of demolition or land alterations necessary for construction, and direct costs to bring the asset into existence
SBA amount if purchased from developer
Based on acquisition cost including land
When can SBA be claimed
When the claimant has an interest in S/B and only once first comes into use
If building extended after introduction of SBA, the capital element of extension is
treated as separate asset and SBA available
