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Chapter 08 - Capital allowance - Coggle Diagram
Chapter 08 - Capital allowance
Plant and machinery capital allowance
Exclusions
Buildings
Structures
Land
Inclusions (if satisfy function tests)
Electrical (include lighting), cold water, gas and sewerage system
Space or water heating system and powered system of ventilation
Manufacturing and display equipment
Expenditure on altering land for installing plant and machinery ONLY
Computer software
Function vs setting test
If assets fulfill a function in which trade carries on => Plant, capital allowances available
If assets part of a setting in which trade carries on => no capital allowances available
Main pool for plant and machinery
Inclusion
Car with <110 g/km
Most factory and office equipment
All additions and disposals in the period
Annual investment allowance (AIA)
Allowance for the first 1,000,000 of expenditure on plant and machinery for 12-month period account
No AIA for cars
Adjusted for period more or less than 12 months
First year allowance (FYA)
Cars with =<50 g/km
100% allowance on new motor car
FYA not adjust pro-rata
Writing down allowance
18% of TWDV is allowance in the main pool after taking account of additions and disposals
WDA is time apportioned
Special rate pool
Expenditure on
Long life asset (>=25 yrs) if trader spend more than 100,000 in period (pro-rata if needed)
Solar panels
Plant and machinery integral to the building
Car with CO2 > 110 g/km
Annual investment allowance
Use against SR pool expenditure in priority to main pool
No AIA on cars
Adjusted pro-rata
Writing down allowance
6% on TWDV of the SR pool
WDA time apportioned
Small balance of unrelieved of 1,000 or less (adjusted pro-rata) can be written to nil
Balancing charge and allowance
If proceeds > TWDV, balancing charge always arise
If proceeds < TWDV, balancing allowance arises only on the cessation of trade
Private use asset
Only give relevant amount to business use
Balancing adjustment on disposal is business percentage only
Not relevant for employee's private use