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  • Tax Memo - Corporation tax - Capital allowances - Types of asset - Plant and machinery or buildings - 4300
    In order to clarify whether certain items are plant or part of a building, statutory lists detailing buildings and structures which qualify for capital allowances were introduced. The lists are not exhaustive and attention should still be given to relevant case law. In the event that the statutory lists are unclear on any point, the following definitions (based on decided case law) should be used: - machinery can be broadly defined as any asset with moving parts, and qualification for allowances is generally...
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  • Tax Memo - Corporation tax - Capital allowances - Plant and machinery - Quantifying the expenditure - Additional costs - 4465
    Additional costs may include any of the following: - altering buildings incidental to the installation of plant and machinery for the purposes of the trade; - demolition of existing plant and machinery that is being replaced (if the plant is not replaced, the net cost of the demolition is treated as qualifying expenditure in its own right); - moving plant from one site to another and re-erecting it (providing the costs are not deductible from profits); and - any additional VAT liability arising under the VAT...
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  • Tax Memo - Corporation tax - Capital allowances - Buildings - 5560
    Over the years there have been a number of allowances available for buildings. For expenditure incurred on or after 29 October 2018 a new structures and buildings allowance was introduced. The previous allowances given for expenditure incurred on buildings, such as business premises renovation allowances and flat conversion allowances, have been removed but issues may arise with both where a sale is made during the clawback period. For the general principles of capital allowances see ¶4000 onwards. It should...
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  • Tax Memo - Income tax - Miscellaneous income and anti-avoidance provisions - Pre-owned assets - Chargeable amount - Tangible assets - Land and buildings - 32265
    Taxable income will arise where land is occupied by an individual who either: - previously owned the land, or some other asset which was sold to finance the land (the “disposal condition”); or - provided the money for the purchase of the land (the “contribution condition”). The chargeable amount is the appropriate rental value, after deducting any payments made in return for occupation of the land. In most cases the appropriate rental value will be fixed for a period of 5 years. - Where a new interest...
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  • Tax Memo - Capital gains tax - Specific types of disposal - Capital sums derived from assets - Compensation receipts - Lost or destroyed assets - 48165
    Where a capital sum such as compensation, or a payment under an insurance policy, is received for an asset which has been lost or destroyed, the capital sum received will be treated as disposal proceeds. - If compensation is not received for the asset, the disposal proceeds will be equal to any salvage money received. The resulting loss will be allowable for offset against chargeable gains. - Land and buildings may be treated as separate assets for these purposes. This means that if a building is completely...
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  • Tax Memo - Capital gains tax - Specific types of disposal - Special relationship with the seller - Gifts - Reliefs - 48355
    Certain reliefs and/or special treatments are available for the following types of gift: Type of gift Relief/treatment Reference ¶¶ Business assets Gift holdover relief s 165 TCGA 1992 ¶51585 Unlisted shares in trading companies ¶51590 Agricultural property Sch 7 para 1TCGA 1992 ¶51595 On which inheritance tax is chargeable s 260 TCGA 1992 ¶51600 Which is exempt from inheritance tax ¶51605 To charities1 Treated as if acquired for no gain/no loss ss 257, 257A TCGA 1992 ¶48285+ To employee trusts (and,...
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  • Tax Memo - Capital gains tax - Specific types of asset - Other assets - Sundry provisions - Negligible value assets - Criteria - 50160
    Any asset may be subject to a negligible value claim, once its value has become negligible. When considering buildings, HMRC will accept a negligible value claim based solely on the value of the building becoming negligible and not the land on which it stands. However, as a building and the land are strictly a single asset, the land will be deemed to be sold separately and reacquired on the same date, which may give rise to a chargeable gain. HMRC maintains a list of quoted shares which are accepted as being...
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  • Tax Memo - Capital gains tax - Reliefs - Reliefs for business assets - II. Rollover relief - The original asset - Qualifying type - 51270
    The asset must also fall within one of the qualifying classes as shown in the table below. 1. Rollover relief may be available on the grant of an option over land in the UK, if the underlying asset itself would have qualified for this relief. 2. HMRC's view is that a franchisee's rights under a franchise agreement are a capital asset and are not automatically treated as part of goodwill. However, HMRC does accept that a franchisee may be able to generate some goodwill in a franchised business. The value of...
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  • Tax Memo - Inheritance tax - General principles - Valuation - Specific rules - Land and buildings - 55635
    The valuation of land and buildings is generally the subject of negotiation between the taxpayer and HMRC, which uses a team of valuation officers who may be called upon to arrive at a value. The taxpayer will often employ the services of a professional valuer. If agreement cannot be reached, an appeal may be made to the Upper Tribunal (Lands Chamber) and from there through the courts. The value of a half share of land held by tenants in common is discounted to take account of the fact that the demand for land...
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  • Tax Memo - Inheritance tax - National heritage property - Requirements - Qualifying property - 58055
    The Board of HMRC together with the Treasury will take a view as to whether property is important for the national heritage, but property which falls within the definitions outlined below is likely to qualify: - Any pictures, prints, books, manuscripts, works of art, scientific objects, or other non-income yielding things (or any collection or group of relevant objects taken as a whole), which appear to be pre-eminent for their national, scientific, historic, or artistic interest. In determining whether property...
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