Capital allowances – new rules and changes – Michael Lansdell

  Posted by: Dental Design      1st June 2019

As a dental practice owner, you maybe have been interested in the new structures and buildings allowance (SBA) that was introduced as part of the Budget 2018. SBA is now available for expenditure incurred on construction works on qualifying non-residential structures and buildings. Contracts will need to have been agreed from 29 October 2018 onwards.

Relief will be given at 2 per cent a year on a straight-line basis over a 50-year period, which will begin from when the structure or building started its qualifying use. Also, you won’t be able to carry the relief forward to a future date and it will be lost if you don’t claim.

SBA will apply to the costs of renovations and/or new conversions when a development has a mixed use; SBA will be given to the proportion of expenditure that relates to the business part. Also, it is likely to be limited to the original cost of renovation/construction, even if ownership should change.

Plant and Machinery (P&M) allowances will remain at a higher rate than SBA, so it is important to identify which features of a project qualify for P&M and which for SBA. You will now be able to claim 100 per cent relief on qualifying P&M expenditure of up to £1 million a year in the period 1 January 2019 to 31 December 2020. This is a temporary increase, so timing is everything! Until the end of December 2018, the ‘old’ limit of no more than £200,000 applies.

SBA was brought in to challenge an apparent gap in the capital allowances system, along with the temporary increase to annual investment allowance (AIA). Also introduced as part of the 2018 Budget are changes to the special rate writing down allowance (WDA), which will be reduced from 8 per cent to 6 per cent from April. WDA occurs when you deduct a percentage of the value of the item(s) from your profits, and the value is generally what you paid for it or what you would expect to sell it for (if it was a gift, for example, or you owned it before your business was started). The new, special rate will apply to things such as expenditure on cars with CO₂emissions above 110/km.

Specialist accountants, such as Lansdell & Rose, can guide you through the changes, leaving you to get on with the business of running your practice.

For more information please visit www.lansdellrose.co.uk
or call Lansdell & Rose on 020 7376 9333.