Capital Allowances Flashcards
Is depreciation an allowable expense
No
What can capital allowances be claimed on
Capital allowances can be claimed on plant and machinery:
- Cars and Vans
- Furniture
- Computers
- Production machinery
*Not buildings and fixtures and fittings installed to the building.
Exceptions are lifts, escalators, AC, CCTV & fire alarms
What are the 4 available pools for CA
- Main Pool
- Annual Investment Allowance (AIA)
- First Year Allowance (FYA)
- Special Rate Pool
What is the main pool and the % Rate
This is all assets that qualifies for CA but does not fit into any of the other pools. The other pools take precedence over this.
- 18% on the balance of the pool
What is the name of the balance of the pool
2 options:
- Written-down value (WDV)
- Tax Written-down value (TWDV)
What is the name of the allowance
Writing-down allowance
what is the % Rate of AIA
100%
What is the AIA allowance limits
£1,000,000 @ Jan 19
£200,000 Before
What can you claim AIA on?
All plant and machinery except cars - Commercial vehicles such as vans and lorries are acceptable.
What happens if the accounting period is less than 12M for AIA
the AIA value is proportionately adjusted
i.e. first set of accounts is 9 months and profit is £1mn then 1 / 12 *9 = 0.75mn
What is the FYA limit and % Rate
There is not an FYA limit and you can claim 100%
What qualifies for FYA
- Low Emission Cars 50g/km or less
- fully electric cars and vehicles
- energy saving and environmentally beneficial equipment
- gas, biogas and hydrogen refuelling equipment
Is the FYA in addition to the AIA allowance
Yes it is and you should always apply FYA to qualifying assets first as there is no limit. Remember there are a lot less qualifying assets for FYA then AIA.
What is the special rate pool
the special rate pool is a pool that is charged at a lower rate for qualifying assets (6% vs 18%)
What items are in the special rate pool
- Integral part of a building that qualify e.g. lifts, AC, CCTV etc.
- items with a long life (25+ Years) and a total value of over £100,000 bought in a single accounting period (if its less it is main pool)
- cars with emissions of 110g/km
Special rate % rate
Before Apr ‘ 19 it was 8%
After it is 6%
When should single asset pools be used
a single asset pool can be created for any asset but the asset must then be sold in the next 8 years otherwise it transferred to the main pool.
a single asset pool must be created when an asset is used outside the business
When should the HMRC be informed of a single asset pool
HMRC must be informed by 31st January which is 22 months after the end of the tax year. e.g. 2020/2021 tax year ending 5th April ‘21 has a deadline of 31st Jan ‘23 for single asset pools.
When the business ceases what happens to remaining assets
They are deemed to have been disposed for their market value
