Module 4 Flashcards
Aim of capital allowances is to?
Deduct for the net cost of a qualifying asset
Plant and machinery does not include?
Expenditure on a building
Walls floors Ceilings and doors
Performs and function = trade
Expenditure on a structure
Allowances can also be claimed on (plant and machinery)
Alteration of building to install
Demolition costs
Thermal insulation
If the obligation to pay becomes unconditional within one month of end of chargeable period,
Deemed to have incurred within it
Hire purchase
Capital allowance on cash cost on day 1
TWDV
Starting expenditure
B/F
Cars don’t qualify for
AIA
Each disposals is recorded at the
Lower of cost or proceeds
Writing down allowance - length of period
% x (n/12) x qualifying expenditure
N= months in period
Qualifying expenditure (B/F + additions - disposals) of less than £1000
Claim any allowance up to value of qualifying expenditure, writing pool to 0
How is qualifying expenditure calculated?
Brought forward + additions - disposals
Better to use AIA on
Special rate items
AIA Provides full twx relied on?
Plant and machinery other than cars to all businesses
AIA is annual so should be
Scaled up or down for different accounting periods
AIA before jam
Months before jan x 200000/ 12 + m from jan x 1000000/12
First year allowances
Given on things kinder to environment
Without limit
Special rate pool
Long life assets -25years + only if more than £100,000 (scaled up or down)
Integral features - electrics, water, heat, lifts,
High co2 emission cars
Balancing allowances are
Sell < TWDV (extra tax relief)
Balancing charges when?
Sell > TWDV
Too much tax relief - give some back via a balancing charge
Dixon vs Fitch’s garage?
Canopy over a petrol station not qualifying as had no function and instead formed pay of the setting
Not premises
Used in business
Working capital
Plant
As well as on purchases of plant and Machinery, capital allowances can be claimed on?
Alteration to install plant and machinery
Demolition costs
Thermal insulation
The effective date on which expenditure is incurred is when?
The date on which the obligation to pay that amount becomes unconditional
Issue of certificate- unconditional within one month of end of chargeable period
What is the TWDV?
Tax written down value
Expenditure which has not yet received tax received - brought forward at start
Writing down allowance?
Annual allowance given to a trader / company in respect of qualifying expenditure
Disposal recorded at?
Lower of cost or proceeds
Allowances grantees when?
After additions and disposals have been accounted for
