Capital Allowance on Tooling

Capital Allowance on Tooling

Didn't find your answer?

A small private company has, towards the end of the financial year, invested in tooling (moulds) for a contract that will last for about 2 years. It is planned to recover the total cost of the tooling on a per item basis. The tooling has been capitalised..  Is this tooling eligible for the Annual,Investment Allowance? Or is the cost treated as an expense as it is wriiten off.

Many Thanks

Bob

Replies (1)

Please login or register to join the discussion.

By Steve Kesby
28th Nov 2011 13:57

You can't claim...

... on the depreciation as you write it off.

If it's capital (and you suggest that it is), then it's plant eligible for AIA.  See BIM35415 re: Hinton v Maden & Ireland though.  HMRC accept a life of two years or less as qualifying as revenue expenditure in certain circumstances (eg software, and I think carpets used to get a similar mention), if you're minded to push the envelope.

If you're incurring any expenditure on patents for your moulds, separate it and claim it as a revenue expense.

Thanks (0)