The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
In the broadest sense, capital allowances are a form of tax-approved depreciation. Depreciation, as calculated under GAAP, is not an allowable deduction in computing the profits of a trade chargeable to income tax or corporation tax because it is an item of a capital nature. See the Capital vs revenue expenditure guidance note.
Instead, relief is given by treating the capital allowances as an expense to be deducted when arriving at the taxable trading profits. Likewise, any charges are treated as taxable receipts.
Capital allowances are considerably more restricted than the accounts depreciation. The relevant legislation is set out in the Capital Allowances Act 2001.
Capital allowances are only available for a limited range of assets, each with a separate set of rules, the main ones are:
plant and machinery including cars, see the Definition of plant and machinery and Capital allowances on cars guidance notes
integral features and long-life assets, see the Special rate pool and long life assets guidance note
research and development facilities, see the Research and development tax relief ― capital expenditure guidance note
structures and buildings (from 29 October 2018), see the Structures and
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionSubsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel. See the Travel expenses guidance note for more information of when
Statutory references to ITTOIA 2005 relate to unincorporated businesses and CTA 2009 relate to companies unless otherwise stated.Legal and other professional fees can represent substantial costs to a business. A detailed analysis is often required for the purpose of preparing tax computations as
Calculation of the effective tax rateAn international group’s effective rate of tax is usually calculated as the amount of tax it pays divided by its consolidated profits. The effective tax rate depends largely on:•the rate of tax paid by each company in the group•the companies in which profits are
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.