Capital Allowances

Question 1

Is depreciation an allowable expense

Answer 1

No

Question 2

What can capital allowances be claimed on

Answer 2

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

Question 3

What are the 4 available pools for CA

Answer 3

• Main Pool
• Annual Investment Allowance (AIA)
• First Year Allowance (FYA)
• Special Rate Pool

Question 4

What is the main pool and the % Rate

Answer 4

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

Question 5

What is the name of the balance of the pool

Answer 5

2 options:
- Written-down value (WDV)
- Tax Written-down value (TWDV)

Question 6

What is the name of the allowance

Answer 6

Writing-down allowance

Question 7

what is the % Rate of AIA

Answer 7

100%

Question 8

What is the AIA allowance limits

Answer 8

£1,000,000 @ Jan 19
£200,000 Before

Question 9

What can you claim AIA on?

Answer 9

All plant and machinery except cars - Commercial vehicles such as vans and lorries are acceptable.

Question 10

What happens if the accounting period is less than 12M for AIA

Answer 10

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

Question 11

What is the FYA limit and % Rate

Answer 11

There is not an FYA limit and you can claim 100%

Question 12

What qualifies for FYA

Answer 12

• Low Emission Cars 50g/km or less
• fully electric cars and vehicles
• energy saving and environmentally beneficial equipment
• gas, biogas and hydrogen refuelling equipment

Question 13

Is the FYA in addition to the AIA allowance

Answer 13

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.

Question 14

What is the special rate pool

Answer 14

the special rate pool is a pool that is charged at a lower rate for qualifying assets (6% vs 18%)

Question 15

What items are in the special rate pool

Answer 15

• 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

Question 16

Special rate % rate

Answer 16

Before Apr ‘ 19 it was 8%
After it is 6%

Question 17

When should single asset pools be used

Answer 17

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

Question 18

When should the HMRC be informed of a single asset pool

Answer 18

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.

Question 19

When the business ceases what happens to remaining assets

Answer 19

They are deemed to have been disposed for their market value