Can you claim AIA where RHI payments are received?

Didn't find your answer?

I have a client who has installed a air-source heat pump and is receiving RHI payments.

From studying the legisaltion https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23141 you can't claim ECA's when these are claimed.

I am aware you can claim WDA's instead.

But, is it possible to claim AIA instead which effectively is the same as ECAs as there expenditure in the year is less than £1,000,000 on Plant & Machinery?

Any comments are appreciated.

Replies (18)

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By Wanderer
18th Aug 2022 14:50

Dunno if I'm looking in the wrong place but that page you link to references CAA01/s45AA however that appears to be repealed:-
https://www.legislation.gov.uk/ukpga/2001/2/section/45AA
https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23140
This FYA will come to an end on 1/6 April 2020. Expenditure must be incurred before 1/6 April 2020 to qualify for the FYA.

Happy to be corrected if I should be looking elsewhere.

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Replying to Wanderer:
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By Greg Park
18th Aug 2022 15:18

Thanks Wanderer.

The legislation I was looking at says updated May 2022 so I believe it is correct.

Either way unfortunately it does not answer my question!

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Replying to Greg Park:
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By richard thomas
18th Aug 2022 15:30

You have an odd idea of which statement is likely to be correct.

As Wanderer says, the legislation.gov.uk site, which is maintained by legally qualified staff and is the official publisher of the law, shows s 45AA as repealed and gives the detail of the legislation that does the repealing and the date of the repeal.

But you prefer the HMRC Capital Allowances Manual because it was updated in May 2022. (I am assuming you know that the reference to updates means not that page but the Manual generally, and if you look at the May update it is nothing to do with RHI). As usual HMRC have not got round to updating the bit you refer to to indicate that it no longer applies, or if they have, it's not on that page.

I prefer Wanderer's view for the reasons above.

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Replying to richard thomas:
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By Greg Park
18th Aug 2022 16:05

Thank you for your response it is helpful.

I was not aware that it meant a general update.

I have learned something useful today!

I do find the language in your response quite forceful, but this can be difficult over forums as a friendly tone is hard to convey while making your point.

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Replying to Greg Park:
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By Wanderer
18th Aug 2022 16:12

Greg Park wrote:

I do find the language in your response quite forceful, but this can be difficult over forums as a friendly tone is hard to convey while making your point.

Good job you never appeared in front of Judge Thomas then! If you think his response was forceful, rather than factual, & want to get an understanding of how forceful he can actually be then read some of his decisions when he has laid into HMRC!
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Replying to Wanderer:
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By Greg Park
18th Aug 2022 16:54

I was reporting on how I feel not on how other people may feel.

I don't think these forums are legal courtrooms.

Perhaps my point should be I don't like forums for this reason!

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Replying to Greg Park:
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By Wanderer
18th Aug 2022 15:30

Well that's not legislation you are looking at is it? It's just HMRC manuals.

And the 'updated 9 May 2022' just means that the whole Capital Allowances manual has had some updates. See here for what's actually been updated:-
https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/updates

That's (one of the reasons) why I looked at the actual legislation.

If you have a link to relevant actual legislation then please share.

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Replying to Wanderer:
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By Greg Park
18th Aug 2022 16:12

Thanks.

As previously mentioned I was not aware of the difference so the responses are helpful.

Unfortunately they don't actually affect the question I was asking.

I am sorry if my response came across as reactive I was only wishing to convey why I was using the information I was, which I now believe to be in error but I do believe it is misleading from HMRC.

Posting this thread has absorbed my attention without an answer to my query. I think I will think twice again before posting.

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Replying to Greg Park:
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By Wanderer
18th Aug 2022 16:16

Greg Park wrote:

Posting this thread has absorbed my attention without an answer to my query. I think I will think twice again before posting.

No don't do that. Your query was a good one & an area that I've never considered before.

Just ask your self when was this expenditure incurred? The answer to that will determine whether you should be worrying about the information in that link at all.

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By Tax Dragon
18th Aug 2022 16:16

There would be no need for HMRC to update CA23141, as it discusses a restriction to the allowance discussed in CA23140 (which Wanderer has guided you towards) which says that the allowance ran out in April 2020. (I paraphrase.)

It's good practice to read the manuals (and it's much more than many a querist in here seems to have done), but you need to think about the context of what you are reading - at the very least, flip back to the nearest contents page and see what else is relevant to what you are considering.

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By Tax Dragon
18th Aug 2022 16:35

TIIN73 (which came out when the FYA for this stuff was introduced) says: "For the majority of business (95 per cent +) the changes will have no impact because the majority of the expenditure they incur on plant and machinery will be eligible for full relief under the separate Annual Investment Allowance (AIA)."

HMRC's view in black and white. Hopefully you feel justified in having posted now?

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Replying to Tax Dragon:
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By Wanderer
18th Aug 2022 16:38
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Replying to Tax Dragon:
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By Greg Park
18th Aug 2022 17:03

Thank you Tax Dragon.

The text you have given says majority with be eligible I want to find out whether these are for the specific item, in all likelihood they are as you have infered.

Unfortunately I can't find TIIN73 with a Google Search.

I think I am still unsure on the treatment.

From my overall experience I would choose not to post again.

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Replying to Greg Park:
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By Tax Dragon
18th Aug 2022 17:34

You shouldn't let the FYA rules (and in particular the restriction you referred to up front) confuse you. They don't exist anymore. Take them out of the picture and what do you think?

I think AIA is available. I also think it will be on the full cost (i.e. not reduced by the RHI payments). As these payments are taxable income of the business, it would be harsh if they affected the AIA claim.

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Replying to Tax Dragon:
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By Greg Park
22nd Aug 2022 15:40

Thanks Tax Dragon

I agree with this treatment having done further research, I did get heavily distracted by the guidance.

:)

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Replying to Greg Park:
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By Wanderer
18th Aug 2022 17:47

Greg Park wrote:

The text you have given says majority with be eligible I want to find out whether these are for the specific item, ....

For the relevant element of TIIN73 that TD was referring to see the Later reference link I have given you.

You are focusing too much on the Section s45AA references. IF your expenditure is post April 2020 ignore all the Section s45AA restrictions and go back to first principles.

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Replying to Wanderer:
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By Tax Dragon
18th Aug 2022 18:14

By "first principles" I assume you mean the part of the manuslation that deals with AIA? https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23080.

(If you want to know about AIA, read the AIA rules? That's my 'context' point again, in a different guise, I think.)

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Morph
By kevinringer
22nd Aug 2022 11:44

What are the circumstances of the payment? RHI payments are exempt from tax if paid to an individual householder who is generating heat for their own domestic use.

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