Grant against Capital

Grant against Capital

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Been off for a few weeks and the mind is in go slow mode.

Client received a grant towards a new struture (no eligible for CA's).  We have treated the grant credit as deferred income and are releasing this income in line with depreciation.  The depreciation on the structure is added back in the tax comp.  I assume the credit to the P&L for the grant release is deducted from the computation in order that the capital grant is not taxed.  Then if the struture was sold the net base cost would be the actual cost less the grant received?

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By Steve Kesby
21st May 2012 13:45

Yes/No

I'd agree that the grant hitting the P&L is capital (not taxable because of S.96 ITTOIA 2005/S.93 CTA 2009), as long as it's not an Industrial Development Grant to which S.105 ITTOIA 2005/S.102 CTA 2009 applies.

I don't see any reason to reduce the CGT base cost by the amount of the grant (see S.38(1)(a) TCGA 1992).  If none of the grant's repayable in the event of disposal, it looks to me to be a windfall.

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