My client has paid for a rented outbuilding to be renovated for business premises for both his business and his girlfriend's (separate) business. The owner of the building has contributed 25% of the cost and the girlfriend is paying back by a small contribution to his business each month. The works completed include items which I understand are not capital allowances (new roof joists, new floors, plastering and painting) and some which I think are P&M or integral features (electrical works, lighting, replacement of soil pipe, new water system and insulation). Am I right in how I have attributed these?
Once I have calculated the capital allowances, I am going to use the AIA to offset them against profits. Can I deduct the full amount against his business and how do I treat the repayments from the girlfriend in the next financial year.
All advice appreciated
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Complicated enough but then there's the landlord's contribution and the fact that the tenant doesn't own the building.
What is the nature of the two businesses?
What is the nature of the two businesses?
Uggghhh! Horrible English. That should be "what are the natures" surely?
Accountant A wrote:
What is the nature of the two businesses?
Uggghhh! Horrible English. That should be "what are the natures" surely?
Fayre comment
In that case, I would have thought very little of the expenditure will qualify. You probably need to scrutinise the HMRC manual https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca22010 (which may or may not be an objective view of what relief is available).
What is the 25% contribution documented as and how is that being treated?
The 25% was paid directly into my client's account as a one-off payment from the landlord. I was unsure how to treat this. Should I deduct it from the overall capital cost or keep it in and treat is as a liability?
I'm well out of my depth but it looks like a reverse premium.
There have been more recent questions here about reverse premiums/premia but this looks like the last one with an answer.
https://www.accountingweb.co.uk/any-answers/is-there-a-difference-in-the...