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Annual Investment allowance

Annual Investment allowance

Hello,

I have a client (children’s nursery) who has purchased the following assets, Furniture, Cupboards, Laptops and Development of outdoor arena.  Can I get 100% relief under AIA for tax purposes on all the assets.  Total value is under 100,000 threshold.

Thanks in advance

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By plummy1
01st Dec 2011 19:10

Capital Allowances Claims

 

Furniture & cupboards definitely. The total cost of the laptops can be claimed if they are solely used within the business. What do you mean by development of the outside arena though?

Also have you looked into pursuing a capital allowances claim on the purchase cost of the nursery as probably 20% of the value is P&M. This will probably only be worth while if the purchase cost plus any subsequent redevelopment comes to £300k plus though.

 

Regards

John. 

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By plummy1
02nd Dec 2011 21:21

Capital Allowances Claims

You can claim capital allowances on carpets. I will have to check on the tarmac stuff. Was it it to repair an existing area of tarmac or to create a new tarmac area?

Let me know and I can get you a quick answer from a specialist.

Regards

John

 

 

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03rd Dec 2011 09:36

Allowances

You can claim AIA on outdoor carpets, unless of course they are replacing old ones, then you claim the cost as a repair. You can also claim AIA on the costs of landscaping you play area if it is to allow for the installation of plant, the rubberised tarmac may be safety equipment in any case.

Virtual Tax Support for accountants www.rossmartin.co.uk

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By BKD
03rd Dec 2011 21:25

Why £300,000?

If the spend were half of that, 20% of £150k is £30k. At a minimum tax rate of 20% that equates still to a tax redcution of at least £6k - not to be sniffed at.

Now I know that a specialist report may well cost more than that, and I would almost always recommend the engagement of specialists if the sums involved are more significant. But my experience is that provided one is not too aggressive, HMRC will not challenge claims based on published empirical rates. The question is whether or not the marginal relief that a specialist can obtain for you justifies the fee.

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By plummy1
04th Dec 2011 12:36

Why £300,00?

At £300,000 and with capital allowances at approximately 20% of value that would equate to £60k. At 20% tax that means total relief available over time of £12k. Fees in this instance would be 6% of unclaimed capital allowances so £3,600 + Vat (tax deductible).

I take your point about £150k being worthwhile but this would only be where the owner is quick enough to be able to claim the AIA otherwise the 6K would have to be claimed over time. We often find by the time someone has advised the client that they could have claimed capital allowances on the original purchase it is too late to claim the AIA.

Claims on furnished holiday lets which qualify can be undertaken under the value of £300k where things such as floor-plans exist etc.

 

 

 

 

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04th Dec 2011 13:42

Be careful

The tyoe of development you are referring to is often funded by grants, from the Local Authority, which are allocated with instructions as to how to be spent. You then have to formally return, to the council, how you spent the funds.

Outdoor play areas were the big push over the last couple of years so I would be surprised if they had not received some support.

The soft play surfaces are a safety feature under certain equipment as Nicola surmises as it has to be up to a certain quality depending on the level of fall.

This last year grants for IT to encourage us to go online were the unexpected bonus.

I would doubt that a nursery would have that level of F&F at purchase, apart from the usual integrated features such as toilets and kitchen facilities, if you had to install this level of equipment.

 

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