November 22, 2008Integral features
This is a new category of capital allowances that applies to expenditure made after 31 March 2008 for companies, or 5 April 2008, for unincorporated businesses. If your client is about to buy or sell a commercial property he will need to be prepared to negotiate for some of the cost to be allocated to this new category of assets.
Integral features can only comprise of assets in the following five groups:
a) Electrical systems (including lighting systems);
b) Cold water systems;
c) Space or water heating systems, a powered system of ventilation, air cooling or air purification and any floor or ceiling comprised in such a system;
d) Lifts, escalators and moving walkways; and
e) External solar shading.
Groups a) and b) would have previously been categorised as part of the building, so only eligible for capital allowances if the building happened to qualify as an industrial or agricultural building. Now they will qualify for a writing down allowance (WDA) of 10%, but what is more important is that they are technically classed as plant and machinery. This allows items within groups a) and b) to qualify for an enhanced capital allowance (eca) of 100% if the particular item is found on the green technology list on the eca website (see below).
Other groups of assets on the integral fixtures list were previously treated as plant fixed to buildings (fixtures) and eligible for WDA of 25%, but now only qualify for WDA of 10%. Most of the items which were previously fixtures continue to qualify as such but the WDA is now only 20% per year.
Finally its worth noting that all new expenditure on integral features and on fixtures will qualify for the Annual Investment Allowance (AIA), which gives a 100% deduction for up to £50,000 of expenditure in one tax year.
Budget announcement of integral features
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