Partnerships and AIA

[eteb3]

A "mixed partnership" (a mixture of individuals and companies as partners) isn't entitled to AIA.

Does anyone know:

Could the company member do all the investing itself, claim on its own AIA, and then contribute the AIA'd assets to the partnership as partnership assets?

Would that be a workaround? Any others?

Thanks.

 

[UK Contractor Accountant]

Mixed partnerships—those with both individual and corporate members—cannot claim the
Annual Investment Allowance (AIA) on qualifying plant and machinery expenditures. While they are excluded from the £1m AIA, they can still claim other capital allowances, such as Full Expensing or First Year Allowance (FYA), which allow 100% deduction in the purchase year.

 

[eteb3]

Still puzzled. Do those other allowances do the same thing as AIA by another route?

Or are mixed partnerships still at a disadvantage? Presumably so, because individuals or companies could use full expensing and FYA as well as AIA if acting alone, but not while in partnership?

 

[UK Contractor Accountant]

Still puzzled. Do those other allowances do the same thing as AIA by another route?

Or are mixed partnerships still at a disadvantage? Presumably so, because individuals or companies could use full expensing and FYA as well as AIA if acting alone, but not while in partnership?

its only the corporate partners share that can be claimed as full expensing or FYA

From HMRC manuals:

CA11145​

Mixed partnerships

For a partnership with some members within the charge to IncomeTax and some within the charge to Corporation Tax, before the partnershipprofits are allocated to the members, it may be necessary for the partnershipto submit more than one computation, for example one in respect of individualmembers who are subject to Income Tax and one in respect of company members whoare subject to Corporation Tax. As withthe corporate partnership above, the computation for the ‘notional company’ caninclude a claim to capital allowances that are only available to companieswithin the charge to Corporation Tax. Inthis way, partnership members within the charge to Corporation Tax may obtainthe benefit of first year allowances such as full expensing or thesuper-deduction (which partnership members within the charge to Income Tax areunable to access).

 

[eteb3]

Thanks

Any way to shift the whole expense to the notional company so the whole expense can be offset by the company, with no “penalty” for the individual member?

 

[UK Contractor Accountant]

Thanks

Any way to shift the whole expense to the notional company so the whole expense can be offset by the company, with no “penalty” for the individual member?

Nope -I'm afraid not.

 

[eteb3]

Thanks for all the explanations