Module 4 - Further Aspects of Capital Allowances Flashcards
Does the First Year Allowance (FYA) apply to second hand zero emission cars?
No. In this case the cars should be treated as assets in the main pool.
Do we priortise Long-Life assets in application of the AIA?
Yes. long life assets are in the special rate pool (6%). They are elligble for the AIA we priortise using the AIA on them as it maximises the write down allowances we can claim.
What is the de minimis amount for long life assets?
The de minimis for long life assets is £100,000. If the value of the long life asset is less than £100,000 it can be treated as an asset in the main pool rather than the special rate pool.
This £100,000 de minimis is prorated for the length of time the accounts are drawn up to.
What are the three main types of asset tht belong in the Special Rate Pool?
- Long life assets
- Integral features
- Cars with CO2 emissions in excess of 50g/km
What is a long life asset?
Plant and machinery is a long life asset if it reasonable to expect that it will have a useful economic life of more than 25 years when it is new.
What are Integral features?
Integral features are listed in s33A:
• Electrical systems (including lighting systems);
• Cold water systems;
• Space or water heating systems, powered systems of ventilation, air cooling
or air purification, and any floor or ceiling comprised in such systems;
• Lifts, escalators and moving walkways; and
• External solar shading.
Things that would be left in the PPE if you were selling it unfurnished.
How do we treat plant only partly used for trade?
Kept in its own seperate column and an allowance is given based on its business use.
The TWDV of the asset will be reduced by the full allowance but the trader will receive an allowance only equivalent to the percentage of business use for each asset. (Total WDA is prorated for business use).
An asset that is partly used for trade is still eligible for the WDA, FYA and AIA if it is applicable.
Employee use of assets for private activities does not need to be accounted for in the way above. Only if the owner of the business uses the assets privately.
What are balancing allowances?
Aride on the disposal of individual assets that are in their own pools where the sales proceeds are less than the balance of unrelieved expenditure (TWDV).
Generally only occur in the SPR pool and the main pool on the cessation of the business.
Only the trade use proportion can be claimed.
What are balancing charges?
Arise on the disposal of assets that are in their own pools, where the sales proceeds exceed the unrelieved expenditure.
Also arise where the qualifying expenditure falls below £0. This avoids the carry forward of a negative TWDV.
They claw back excess allowances and are added to the traders income to reach taxable profit.
