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. CAA 2001, s 11(1)
The following are the most common qualifying activities:
CAA 2001, s 15
Simplified cash basis and fixed rate expenses (2013/14 onwards)
ITTOIA 2005, ss 31A, 31B
CAA 2001, s 1A; ITTOIA 2005, s 94E
For more details on the adjustment required for capital allowances purposes on entering the simplified cash basis, see Tolley’s Income Tax 2019/20 Chapter 75.8.
Simplified cash basis for unincorporated property businesses 2017 18
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