Capital Allowances Flashcards
What do HMRC accept is a reasonable expected asset life to be classed as plant?
Two or more years
What if an asset lasts between one and two years?
Specific facts are looked at
What facts determine if an asset between 1 and 2 years life can have cap allowances?
If the asset has a function it will be plant. If it is incurred as part of the setting it will not be plant.
Name items in List a, CAA 2001 s21 that are classed as buildings and thus will not qualify as plant
- Walls, floors, ceilings, doors, gates, shutters, windows, stairs.
- Mains services and systems for water, electricity and gas.
- Waste disposal systems.
- Sewerage and drainage systems.
- Shafts or other similar structures.
- Fire safety systems.
Name items in CAA 2001s22 - structures and land - that are not qualifying as plant
a. The provision of a structure or other asset in List B; or
b. Any works involving the alteration of land.
List B contains the following:
1. Tunnel, bridge, viaduct etc.
2. Pavement, road, car park.
3. Canal or basin.
4. Dam, reservoirs etc.
5. Docks, harbours, wharfs.
6. Dikes and sea walls.
What does s21 and s22 not apply to specifically?
a. Thermal insulation of buildings.
b. Personal security.
c. Integral features.
d. Software and rights to software.
e. “List C” items.
List C contains a number of items - name the more common ones.
Partition walls where moveable
Decorative assets for the enjoyment of the public in a hotel, restaurant or similar.
Swimming pools
Plant or capital - Altering a building for the purposes of installing plant & machinery
Plant
Plant or capital - Demolition costs
Plant
Name integral features and state if they qualify for cap all
Yes they qualify
. Lifts, escalators and moving walkways;
• Space heating systems;
• Air-conditioning and air cooling systems;
• Hot and cold water systems (excluding toilet and kitchen facilities);
• Electric lighting and power systems;
• External solar shading.
What value do you give to an asset that is gifted for capital allowance purposes?
Market value
What are the rules about timing of expenditure - eg payment is staggered?
If there is a gap of more than four months between the date on which an obligation to pay becomes unconditional and the date on which payment is made then expenditure is classed as incurred on the date payment is made.
What can you claim FYAs on?
Designated energy saving plant & machinery
Designated environmentally beneficial plant & machinery which meets strict water savings or efficiency criteria
Cars which are electric with cos less than 50g/km
Zero emissions goods vehicles where expenditure incurred before 6 April 2021
What expenditure goes in the special rate pool?
- “integral features”,
- “long life assets”,
- thermal insulation of buildings used in a business,
- cars with CO2 emissions of more than 110g/km (130g/km for expenditure
incurred before 1 April 2018) (see later chapter), and - solar panels
Which special rate pool items qualify for AIAs?
All of them apart from cars.
How many years would a long life asset be?
At least 25
What is the % for long life assets?
8%
What is the minimum expenditure on a long life asset?
£100,000
New and unused cars with Co2 less than 50g/km - cap all rate?
100% FYA
Cars with Co2 between 51 & 110g/jm - cap all rate?
18%
Cars with Co2 exceeding 110gm/km - cap all rate?
8% - special rate pool
What is the benefit of depooling an asset to the short life asset pool?
If you sell it at a loss within the 8 year period a balancing allowance will arise. If it were in the main pool, it would just reduce the main pool value.
Can multiple private use assets together in the pool?
No, they must be seperate.
Cap allowance rate - New and unused cars with CO2 emiisions of no more than 50g?
100% FYA
Cap allowance rate - CO2 between 51 & 110?
Added to general pool and 18% (NOT AIA)
Cap allowance rate - exceeds 110g?
Special rate pool - 8%
Do cars qualify for AIA?
No
Are legal fees incurred on the renewal of a short lease (< 50 years) allowed?
Yes - must be renewal
What is a short lease defined as?
< 50 years
What do we do with donations in the tax comp?
Add them back - they go into the TTP calculation as a deduction at the bottom.
Are legal fees relating to a share issue allowed?
No
What if an accounting period in corporation tax is longer than 12 months?
We split it in to two APs - 12 months then 3
