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Capital allowances and insurance claim

Capital allowances and insurance claim

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Hi,

A client's property (shop) suffered subsidence and she has received various insurance payouts:

25000 for shop-fittings of which spent 9950 on replacements and 15050 unspent (WDV was 5365)

30000 paid direct to supplier for shop-fittings

18500 for business interruption

I would be really grateful if someone could advise treatment of capital allowances as I've read contradicting things!

Thanks a lot

Replies (4)

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By Portia Nina Levin
11th Nov 2015 12:07

Ignore the £30,000. You have

Ignore the £30,000. You have £9,950 additions to your pool, giving a balance of £15,315 and disposal proceeds of £25,000, giving rise to a taxable balancing charge of £9,685.

The £18,500 is also taxable income of the business, in my opinion.

Thanks (3)
By Tim Vane
11th Nov 2015 12:21

I agree with Portia about the £18,500 being taxable, in case you felt brave enough to challenge her opinion.

Thanks (1)
By plummy1
11th Nov 2015 15:59

Bit confused

You say that the pay out for shop fittings was £25,000 but that £30,000 has gone direct to the supplier for shop fittings. Could you explain?

Thanks (0)
Stepurhan
By stepurhan
11th Nov 2015 16:12

£30,000 ignored

I can only think that Portia is ignoring the £30,000 for practical purposes. It's paid by the client's insurer as a result of the client's insurance so it is the client's money being paid to someone else on their behalf. There are actually additions of £39,950 (£30,000 paid direct by the insurer and £9,950 paid by the client) with disposal proceeds of £55,000 (£30,000 paid direct to the shop fittings supplier and £25,000 paid to the client). The end result is the same though.

As an aside, I hate it when an OP says that they have "read contradicting things" but doesn't say what they have read. If they did, then respondents would simply have to confirm which is correct. Without that, it just sounds like someone is pretending they've made an effort when they haven't really.

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