No capital allowances for plant and machinery installed in Houses of Multiple Occupation

HMRC have recently confirmed their view that common areas in Houses of Multiple Occupation (HMO) are parts of a “dwelling house” and ineligible for capital allowance claims.

The capital allowance legislation specifically denies tax relief for plant and machinery installed in a dwelling house. However, plant and machinery installed in the common areas such as hallways, stairs and lift shafts, in blocks of flats would qualify as the flats themselves are the dwellings, not the building as a whole.

This would seem inconsistent with the HMRC view on HMOs and there may be a test case on the interpretation, particularly as there is no definition of “dwelling house” in the tax legislation. There is also a lack of clarity concerning the status of University Halls of residence where there is often substantial expenditure on plant and machinery in common areas.

See: CA11520 - Capital Allowances Manual - HMRC internal manual - GOV.UK (https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11520) and CA23060 - Capital Allowances Manual - HMRC internal manual - GOV.UK (https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23060)

Buy New Equipment Before 6 April?

Your business year end, not 5 April, is relevant for capital allowances purposes. If however you are running a business and making up accounts to 31 March or 5 April you should consider buying plant and machinery to take advantage of the £1 million Annual Investment Allowance (AIA).

The AIA provides a 100% tax write off for equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems. 

AIA does not apply to motor cars but there is a special 100% tax relief if you buy a new car that emits no more than 50g CO2 per kilometer. Note however that from April 2021 100% tax relief will only apply where there are zero emissions.

July 2019 Tax Tips & News

Welcome...

To July's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice in your own specific circumstances.

We're here to help!                   

July 2019

· Capital allowances SBA update

· HMRC clarify VAT zero-rating of transport of disabled passengers

· Tax-free childcare - don’t miss out!

· Tax-efficient remuneration with pension contributions

· July questions and answers

· July key tax dates

Budget March 2015

Summary

This was a forward-looking Budget, with much of the content based on the assumption that the current Government will pick up where it left off, after the General Election on 7 May 2015.

The sweeteners for voters include; a cut in duty on beer, cider and sprites, including whisky. The tax on road fuel is frozen, but the tax and NI charges for having the private use of a company car or van are set to increase above the levels which had already been predicted.

There are two changes to entrepreneurs' relief which take effect immediately, but those should not affect people who are selling significant stakes in their businesses.

For the future the Chancellor promised to increase the tax-free personal allowance up to £11,000 and introduce a new tax-free savings allowance of £1,000, but not until April 2016 at the earliest. Class 2 NIC is set to be combined with Class 4 NIC, which will be a simplification for the self-employed.

The promised abolition of annual tax returns to be replaced by an online tax account may sound attractive, but HMRC's track-record of mixing up figures submitted under RTI does not bode well for such an ambitious project.

We have organised the coverage below into future promises, which can only happen after the General Election, and immediate changes which take effect from 18 March 2015, or from April 2015.

This newsletter is a summary of the key tax points from the Budget, based on the documents released on 18 March 2015. It is possible that a different position will be shown by the draft legislation which is due to be published on 24 March 2015. We will keep you informed of any significant developments.