HMRC Capital Allowances and How Your Company Could Benefit

1. HMRC HMRC Capital Capital Allowances and How Allowances and How Your Company Could Your Company Could Benefit Benefit Website - https://www.areande.com/

2. Are you a UK taxpayer? Do you own commercial property, personally or within a Limited Company? If the answer to both questions is a resounding yes, then you may be eligible for the HMRC capital allowances tax relief for expenses incurred to improve your business. Investing in a wide variety of expenditures such as, vehicles, laptops, or research and development to improve operations of your business, could actually help reduce your tax bill through capital allowances claims. A capital allowance is an expense that a UK business can claim against a future taxable profit. Capital allowances claims can be taken against most assets purchased for company use, including new machinery, premises or repair work, most of which are

3. usually tax-deductible for some or all of the value of the item from your profits before you pay tax. Depending on the classification of those assets, will have a full or partial claim value attached accordingly, this will also determine whether the allowance is deductible for one year or several. Once a calculation of the amount capital allowance expenditures that can be claimed during a taxation period, it is submitted to HMRC for review. Here is a list of the three main HMRC Capital allowances claims available for UK businesses (Enhanced Capital Allowances claims having ended earlier this year) and how they work: 1. Annual Investment Allowance (AIA) 2. Writing Down Allowance (WDA) 3. Research & Development Tax Relief Annual Investment Allowance (AIA) The annual investment allowance grants businesses special allowance to deduct the full tax value of the investment of assets, such as plants and machinery used solely for business purposes. The annual allowance

4. allowed is £1 million and must be claimed in the same tax year as the item was purchased. Not all Acquired assets are classed as plant or machinery, cars, and any items purchased before they were company property for example. Most plant and machinery can be claimed under the AIA except cars, gifts to the business, and any items purchased before they were used in the company. Some assets that do qualify are: Computers Office equipment and furniture Structural features such as heating, water, electricity, lifts, and air conditioning, etc. Heavy duty vehicles such as lorries and vans

5. Tools and machine equipment For a full list of HMRC capital allowances for plants and machinery, refer to the checklist. The Republic of Ireland’s (RoI) capital allowances claims are similar to its UK counterparts, but unlike The UK’s Annual Investment Allowances, in the RoI allowances may be claimed in full in the year which they incurred but are limited to the mentioned environmental benefits. Writing Down Allowance (WDA) If you have not claimed all the annual investment allowance that you are eligible for, you can claim part of the tax in the following accounting period. The Writing Down Allowance can be used for the assets not covered in the annual investment Allowance such as cars and any

6. gifted business items and those assets owned prior to the business use. A claim for Writing Down Allowance can be made if: The total allowance for annual investment has been exceeded An asset is gifted for use in the business The asset was used for other purposes before being utilised by the business. A percentage of the items value can be claimed each year until said items value reaches a balance of zero. Typically, the price paid for an item, unless gifted, then the market value will be considered when calculating the tax deductions. The rate deductible for company cars is dependent on the level of CO2 emissions. Research & Development Tax Relief Research and development tax credits is a HMRC capital allowances scheme designed to stimulate growth in all sectors where businesses seek to advance, innovate, improve, and create products and services that will positively impact society. The criteria for these capital allowances claims is to be a UK limited company with focus on research and development, to have a turnover of less than £100

7. million or a balance total of €86m, to have been trading for longer than one year, and to have a staff of no more than five hundred. Some of the items that can be claimed for are: Software National Insurance contributions Employee salaries Pension fund contributions subcontractors Claims can be very complex so it is best to talk to a tax experts Areande with specialist knowledge, to get the best of your businesses capital allowances claims. For comprehensive guidance please refer to the HMRC capital allowances manual.