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Guys, please explain why Repainting the exterior of the company’s office building is considered to be allowable when calculating tax adjusted profit ?
Greenzone Ltd runs a business providing environmental guidance.
Thank you.
Repainting and decorating is revenue expenditure on a business asset and is therefore allowable. If capital expenditure was incurred, for example an extension to the building then this would be disallowed. What trade the business operates does not matter.
Dear sir,
In this June 2013 Greenzone Ltd question, the repainting was allowed and extension of office building was disallowed being capex. That is fine.However in the capital allowance calculation the extension of office building could have been added to AIA and claimed the full amount or if not considered Plant & Machinery it could have been added to Main Pool as addition and claimed 18% allowance.
However the answer to the question has not considered this at all, in capital allowance calculations. Could you please explain this. (I googled and found that business premises renovation qualifies for capital allowance)
Another aspect which I will request your help in this question is.
There was sale of a motor car from the Main Pool, Selling price – 9,100 and cost 8,500. The gain of 600 is not considered and a foot note is given that ” The disposal value for motor car [3] is restricted to the original cost figure of £8,500″. What is the relevant rule here? May I request you to explain this also.Thanks and regards in advance.
Quote: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/323611/hs252.pdf
Available capital allowances: Capital allowances are not given on all types of expenditure. The main exceptions are buildings, land and some intangibles such as trade marks and
goodwill. You can claim capital allowances for the following items: plant and machinery, business premises renovation in assisted areas and Northern Ireland”Just because a business incurs capital expenditure that does not mean that capital allowances will be available – it must be qualifying plant and machinery to claim any form of capital allowance whether that is AIA, WDA or FYA! Therefore no capital allowances on building extension unless any part qualified as integral features.
You do not need to check the HMRC website, you need to focus on what is in your syllabus as contained within your study material – this does not include dealing with “assisted areas”!
Fundamental issues that you should know are that when dealing with a disposal you deduct sale proceeds up to a MAXIMUM of original cost in the capital allowances computation and that a motor car is an exempt asset for purposes of capital gains!
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