Capital Allowances Flashcards
(35 cards)
SRP?
special rate pool
6%
MP?
main pool
18%
AIA doesn’t apply to…
cars
only plant & machinery
when a sale is made on an asset, what value do you deduct?
lower of
- original cost
- sale proceeds
do you time apportion assets purchased throughout the year for capital allowance purposes?
no
only apportion when the period of account is shorter than 12 months
MP?
main pool
18%
long life assets?
assets that are expected to be usable for over 25 years and total cost in a 12month period of over 100,000
(time apportion the 12 month period for longer/shorter accounting periods)
what goes in the special rate pool?
- long life assets
- integral features
- thermal insulation
- solar panels
- cars with CO2 emissions over 50g/km
what can’t be treated like long life assets?
- cars
- ships
- plant & machinery used in retail shops, showrooms, offices, hotels or houses
integral features?
e.g., electrical systems, cold water systems, water systems, lifts, solar shading
AIA?
up to 1,000,000 per year on all acquisitions except cars
FYA?
100% relief on cars with 0 CO2 emissions
if a trader cannot reclaim VAT on an asset?
- claim capital allowances on the VAT inclusive price
e.g., cars with private use, traders who aren’t VAT registered
if a trader can reclaim VAT on an asset?
- claim capital allowances on the VAT exclusive price (except cars with private use)
short life assets?
refers to main pool assets that are expected to be used for less than 8 years
an election can be made to place a short life asset in a single pool (rather than main pool) to enable the calculation of a balancing allowance on disposal
if short life asset isn’t disposed of within 8 yrs, it’s transferred to the MP at its TWDV
usually most relevant to computers
usually relevant when AIA has already been spent
how to use AIA in most tax efficient order?
prioritise 18% (main pool) assets and use AIA on SRP assets as they only give 6% relief
benefit of short life assets?
can get balancing allowance in a lump sum on disposal
instead of getting 18% in MP
time limits for de-pooling elections?
sole trader: first anniversary of 31Jan following the end of the tax year in which the period of account ends
company: two years after the end of the accounting period
SBA?
structural buildings allowance
capital allowances on
- commercial buildings
- commercial structures
- cost of demolition, land alterations etc
what does not count as qualifying expenditure for SBA?
land
stamp duty
costs of planning permission / professional fees
buildings which function as dwellings
how to calculate SBA?
straight line 3% for 12 month accounting period
when can SBA be claimed?
only when the asset is brought into use
time apportion if brought in part way through the period
only applies to non-residential property
how does disposal of an asset work for SBA?
no balancing allowance, no balancing charges
pay capital gains tax on the proceeds + 3% SBA paid
whoever inherits/buys the asset takes over and receives the SBA based on the original price of the building
if a business is VAT registered…
use the VAT exclusive price for capital allowance purposes
this is because the business can claim VAT recoverable
