Capital Allowance Tax

[jam]

Hi

I wonder if anyone knows anything about capital allowance tax. My boss had surveyor round and did well what ever it is they do and anyway he has around £175,000.00 in tax credits or something like that anyway. What can you do with these? What can it be used for? Can it be offset against anything? Can you use it to pay other tax. I probably sound like I dont know what I'm talking about here, and thats because I dont!! but any info on this would be great.

Thanks

 

[Jaydee]

It is common when a tax payer acquires a property to trade from that there are opportunities to restate some of the purchase consideration as plant/fixtures etc.

The surveyor would have quantified how much in value could be restated.

The difference is that cost attributable to the freehold can only be carried forward to offset any CGT on disposal, whereas plant and fixtures benefit from Capital Allowances.

Put simply, these are tax deductions at 25%, 40%, 50% or 100% that may be used to offset trading profits - so in effect in your case, the Capital Allowances will enable tax relief to be claimed to mitigate current tax liabilities, rather than leaving the cost tied up in the fabric of the building for relief on eventual disposal.