The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
Essentially, capital allowances are a form of tax-approved depreciation on certain capital assets. Relief is given by treating the capital allowances as an expense to be deducted when arriving at the taxable trading profits for the accounting period. This guidance note is intended to be a broad overview of the capital allowances regime, with links to the notes in the Owner-Managed Businesses module which explain the concepts further.
Allowances are available where a person carries on a qualifying activity and incurs qualifying expenditure. A person can be an individual, a trustee, a partnership or a company.
The following are the most common qualifying activities:
CAA 2001, s 15 (subscription sensitive)
Unincorporated businesses with turnover of less than £150,000 (or £300,000 for universal credit claimants) can opt to use the simplified cash basis. These turnover thresholds apply from 2017/18 onwards. For the thresholds that applied between 2013/14 and 2016/17, see the Simplified cash basis for small unincorporated businesses guidance note.
Whilst the unincorporated business is within the simplified cash basis no capital allowances can be claimed, with the exception of capital allowances on cars. If capital allowances have been claimed on a car used in the business, it is not possible to claim a flat rate expense for the business mileage.
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