Capital allowance meaning

In this issue: Companies and corporation tax Stamp taxes VAT Individuals and income tax Taxes management and litigation Employment taxes Budget and Finance Bills Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Court of Appeal decides interest on intra-group loans not restricted under transfer pricing rules but debits disallowed under unallowable purpose rule (BlackRock Holdco 5, LLC v HMRC) BlackRock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 considers whether, for UK tax purposes, interest on intra‑group borrowing put in place to help fund a commercial acquisition is deductible. Two principal points were before the Court of Appeal: the transfer pricing analysis and the loan relationships unallowable purpose question. On the transfer pricing limb, the Court of Appeal allowed the taxpayer’s appeal. As a result, deductions for interest on the intra‑group loans were not curtailed by the transfer...

In this issue Trusts Court of Protection Elderly and vulnerable clients UK taxes for Private Client HMRC Manuals updates Tax avoidance, evasion and non-compliance Budgets and Finance Bills Contentious trusts and estates Pensions, insurance and tax efficient investments International Question of the week Additional Private Client updates this week Daily and weekly news alerts LexTalk®Private Client: a Lexis+® community New and updated content Dates for your diary Trackers Latest Q&As Useful information Trusts Insufficient credible evidence led to rejection of trustee expense claims (Hubbard v Hubbard) An account in common form concerning a trust holding development land, with trustees reporting to beneficiaries. The court determined the trustees failed to properly substantiate numerous costs, leading to substantial disallowances. Core principles include: trustees bear the onus to prove expenditure charged to the trust; poor or absent records are no excuse; and the court may grant a...

In this issue: Spring Budget 2024 The Pensions Regulator Pensions taxation The Pension Protection Fund Investment Scheme governance Daily and weekly news alerts Dates for your diary Trackers Spring Budget 2024 Key pensions announcements and views from the market In the Spring Budget 2024, delivered on 6 March 2024, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, outlined the government’s central objective: to stimulate growth by funnelling more capital into UK equity markets, improving the UK’s standing as a listing venue, and building on the Mansion House reforms announced in the Autumn Statement 2023. Key pensions measures include: expanding the regulatory remit of the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to enable the closure or winding-up of poorly performing defined contribution (DC) schemes, aligned with the reformed Value for Money (VFM) framework requiring DC funds to publish, by 2027, a public breakdown of...

This Practice Note outlines the key rules for taxing income, capital gains, lifetime gifts and estates on death (inheritance tax), together with stamp duty land tax, on the basis of an individual who is UK-resident and domiciled. As tax legislation is frequently amended, this note is not, and must not be, treated as a replacement for specific professional advice where required. Income tax Individuals are charged to income tax on their overall income, with distinct regimes applying to different income streams and to qualifying outgoings that can be set against that income. The main categories of income include: pay from employment, or profits from a trade, profession or vocation (on which national insurance contributions are also due) rents from furnished or unfurnished property or land interest and dividend receipts overseas income (which may already have suffered foreign tax) A personal allowance is deducted from an individual’s total income before calculating the tax, provided their annual income (after deductions for...

For overarching guidance on the special income tax and capital gains tax (CGT) treatment of trusts for disabled persons, refer to Practice Note: Taxation of trusts for disabled persons—income tax and CGT. That Practice Note sets out how to make an election for the special income tax and CGT treatment. Reform Following HMRC’s consultations, notable updates have been made to the definition of a disabled person: The qualifying conditions have been broadened to include people in receipt of Personal Independence Payments for care or mobility at either rate, and to include those who receive the higher rate of the Disability Living Allowance mobility component. The previous anomaly that allowed a CGT-free uplift on the death of the disabled person for interest in possession trusts, but did not extend the same uplift to discretionary trusts, has now been corrected. Both categories of trust for disabled persons now benefit from the uplift...

This Practice Note covers structures and buildings allowances (SBAs), being allowances for capital outlay on non-residential structures and buildings that are constructed, refurbished or converted on or after 29 October 2018. SBAs may apply where plant and machinery allowances do not. In the Corporate Tax Roadmap issued alongside the Autumn Budget 2024 on 30 October 2024, the government confirmed it would preserve the structures and buildings allowance for the remainder of this Parliament. There are specific provisions for SBAs in freeports—see Practice Note: Freeports in England—tax features—as well as for SBAs in investment zones. Qualifying expenditure SBAs are available for capital expenditure incurred on or after 29 October 2018 on: the construction of a non-residential building or structure, provided construction activity commenced on or after 29 October 2018 and no contract for works to be undertaken in the course of constructing that particular building or structure was entered into before that date the acquisition of a non-residential building or structure (or a relevant part)...

1 Capital allowances—for use where the Seller has claimed a first-year allowance or pooled qualifying expenditure on plant and machinery fixtures and the parties will enter into a s 198/s 199 joint fixtures election on completion In this clause 1: CAA 2001 means the Capital Allowances Act 2001; Fixtures means all plant and machinery installed or otherwise affixed in or to the Property so as to become part of the Property at law, including any boiler or water‑filled radiator under section 173(1) of CAA 2001; HMRC means HM Revenue & Customs; Main Pool Plant means those Fixtures included by the Seller in the main pool under section 54 of CAA 2001; Prior Right has the meaning of prior right for the purposes of section 181(2) of CAA 2001; Special Rate Pool Plant means those Fixtures included in a special rate pool under section 104C of CAA 2001. On Completion, the...

CGT-a summary This guide provides an overview of capital gains tax (CGT). In essence, CGT arises when an asset or property is disposed of and the proceeds exceed the original acquisition costs. The surplus is the gain subject to CGT, although various exemptions and reliefs may, depending on the circumstances, reduce or remove that chargeable amount. Disposal A disposal includes both a sale and a gift. For sales, the disposal proceeds are generally the sale price; however, specific rules can substitute the market value where the transaction is with a connected person. For gifts, the market value of the asset or property is treated as the disposal proceeds. If the sale price is below market value-so part sale and part gift-the market value may replace the actual proceeds, depending on the facts. Acquisition costs The acquisition costs will typically be the amount paid to purchase the asset or property, but, similarly to the position outlined above, where the asset or property was...

In this Q&A we have assumed: the deceased’s assessment was correctly calculated a typical financial profile (not, for instance, no recourse to public funds) no top-up was due or paid no deprivation the income-based assessment was up to date Charging for a resident assessed as full cost and availing themselves of a deferred payment agreement would normally be as follows: income contribution: income minus personal allowance, per charging cycle remainder (after 12-week disregard) deferred against property Confirm the first was paid. For the second, check overcharging against beneficial interest; the lower capital limit is £14,250, not £23,250. Assessable capital = beneficial interest − 10% − £14,250 (Care and Statutory Support Guidance 8.12). Example: £200,000 interest gives £165,750. Systems may overrun, exceeding assessed capital; if so, reassess and cap recovery at that, with any surplus proceeds kept by the estate. Deprivation or unpaid income are not protected by the lower limit. If the...