Ch 4: Capital Allowances, unincorporated Flashcards
Capital allowances are only available on…
plant and machinery
Main Pool: Type of assets and the allowance available
Description: Includes most Plant & Machinery and cars with CO2 emissions between 0g/km and 50g/km.
Allowance:
18% Writing Down Allowance (WDA)
Annual Investment Allowance (AIA) up to £1 million (excluding cars)
Scale relief available for periods of long or short ownership.
Special Rate Pool: Type of assets and the allowance available
Description: Comprises cars with CO2 emissions exceeding 50g/km, long-life assets (with a lifespan exceeding 25 years), plant & machinery integral to buildings.
Allowance:
6% Writing Down Allowance (WDA)
Annual Investment Allowance (AIA) up to £1 million (excluding cars)
Scale relief applicable for varying ownership durations.
100% First Year Allowance (FYA) for certain assets, also part of the main pool.
100% First Year Allowance: Type of assets and the allowance available
Description: Includes energy-saving technology and new zero-emission cars.
Allowance: Entire cost of the asset can be claimed in the period of purchase, without time apportionment.
Private-Use Assets (Non-corporate): Type of assets and the allowance available
Description: Assets utilized for private use by sole-traders or partners, excluding usage by employees.
Allowance: Deductions for business use only.
Separate from pooled assets.
Allowances (WDA/AIA/FYA) applied based on business use percentage.
Short Life Assets: Type of assets and the allowance available
Description: Assets eligible for short-life treatment, except cars or private-use assets.
Allowance:
Can be removed from the main pool.
Balancing allowance applicable if sold below tax written down value (TWDV).
Return to main pool if not disposed within 8 years of purchase.
What is the Structures and Buildings Allowance (SBA)?
Applies to commercial structures/buildings from October 29, 2018, with a 3% annual allowance.
Adjusts for account periods.
How are SBAs treated upon the sale of an asset for both the seller and the buyer?
Seller: Relief time-apportioned to sale date, no balancing adjustments. Adds SBA to sale proceeds for gain calculation.
Buyer: Inherits remaining allowances over 34 years, relief based on 3% original asset cost.
