Legislation Flashcards
(42 cards)
S. 5
When is expenditure deemed to be incurred?
Capital expenditure is deemed to be incurred as soon as there is an unconditional obligation to pay.
- 1 Month Rule - exception if the event occurs 1 month after the end of a chargeable period, the expenditure is treated as incurred immediately before the end of the period.
- 4 Month Rule - if in the agreement, the expenditure is not required to be paid until more than 4 months after the amount is treated as incurred on that date.
S. 7
No double allowances
If an allowance is made under any part of the CAA2001 Act, no allowance can be made under any other part of the act.
S.11
General conditions to claim Capital Allowances
- Qualifying activity
- Incur qualifying expenditure
- Qualifying expenditure on the provision of plant or machinery wholly or partly
- The person incurring expenditure owns the plant or machinery
- Must also have a relevant interest in the land
- Must also be in the UK Charge to Tax
S. 12
Expenditure incurred for the purposes of qualifying activity before the activity has begun is treated as incurred on the first day the activity begins.
S.15
A qualifying activity can be:
- A trade
- An ordinary property business
- A UK holiday lettings business
- A profession or vocation
S. 21
Buildings
PMA’s do not include expenditure incurred on buildings (SBA’s)
List A - walls, floors, ceilings, doors
S. 22
Structures
Excluded structures from PMA’s (SBA’s)
List B - tunnels, bridges, viaduct, dams, roads, railways, reservoir, harbor
S. 23
Expenditure unaffected by S. 21 / S. 22
List C - machinery, kitchen appliances, sound insulation, computers, data/AV, fire alarm systems, CCTV, movable partitions, swimming pools
S. 25
BWIC
S. 26
Demolition Costs
If Plant or Machinery is demolished, the cost of demolishing the PMA’s qualifies for the relevant pools of the asset.
S.27 / S. 28
Thermal Insulation of a Building
Expenditure on insulation incurred against the loss of heat to a building.
S.33A
Expenditure on the replacement of Integral Features
- An electrical system (including a lighting system)
- A cold-water system
- A space or water heating system, ventilation, air cooling
- A lift, escalator or moving walkway
- External solar shading
S.33B
Meaning of “Replacement”
Expenditure incurred on replacing an integral feature if it is more than 50% of the cost in 12 months is treated as capital expenditure.
S.35
Dwelling Restriction
HMRC Briefing Note 45/10 provides a basis for student accommodation and cluster flats
S. 45EA
Expenditure on PMA’s for EV Chargers
FYA qualifying expenditure on EV Chargers from November 2016 - March 2025
S. 46
General Exclusions to First Year Allowances
8 General exclusions to claiming First Year Allowances:
- Expenditure incurred in the chargeable period a qualifying activity is discontinued
- Cars
- Long Life Assets
- Leased Assets
Relevant for case study - General exclusion 6 (leased assets) is not applicable if background plant and machinery under S. 45S
S. 60
Meanings of “Disposal Receipt” and “Disposal Event”
Disposal Receipt - Where a disposal value must be brought into account.
Disposal Event - Any kind of event that requires a disposal value to be brought into account.
S. 61
The person that has incurred the expenditure is expected to bring the disposal value to account in the chargeable period.
S. 70A
Long Funding Leases (Also in Finance Act 2006)
Pre 2006 legislation, the lessee of equipment could not claim PMA’s but the lessor could, but this contrasted where if a person borrowed money and used it to buy an asset rather than lease it they could claim PMAs (both are very similar).
Under CAA2001, the lessee rather than the lessor can claim PMAs on the asset.
Long funding lease legislation applies if: the lease is finalised after 1 April 2006, Lease term commences after 1 April 2006.
S. 70R
Background Plant and Machinery
- Plant or machinery that might reasonably be expected to be installed in, or on sites of a variety of different buildings of different descriptions, and,
- Whose sole or main purpose is to contribute to the functionality of the building or which activities can be carried on.
S. 83
Short Life Assets
The actual or expected useful economic life of the asset is irrelevant.
Often discussed as an asset with useful economic life of less than 8 years.
All that matters is that an election is made and it is not excluded.
SLA elections must:
- Be made in writing to HMRC
- Specify the SLA
- The cost of the SLA
- The date of the expenditure incurred,
- Must be made within 2 years of the chargeable period the expenditure was incurred.
S. 84
Exclusions for Short Life Assets
Exclusions include:
- Long Life Assets
- Special Rate Assets
- Long funding leases
- Gifts
- Cars (hire cars for disabled persons can be).
S. 90 - S. 92
Long Life Assets
Plant or machinery that would reasonably be expected to have a useful economic life or 25 years when new.
Applies to an asset as a whole.
S. 93 - S. 100
Exclusions for Long Life Assets
- Fixtures
- Ships (incurred pre 1 Jan 2011)
- Railway assets
- Cars
- Exceed monetary limits (£100,000 over 12 months)
