Save tax with capital allowances

Quite simply, capital allowances can reduce your annual tax bill.MACO TPL scissor icon

They can be claimed for some types of capital expenditure, but generally speaking anything that is used for a business purpose in the practice that has a useful life of two or more years may qualify e.g. surgery equipment, patient chairs, practice furniture.

To qualify, you must by a UK tax payer, own, use or lease a practice and have (or will have) profits against which to offset the tax relief.

They are treated like any other expense and can be deducted from your profits, or added to a loss, when calculating your taxable profits at the end of the financial year.

The deductions recognise that assets and equipment can lose value as a result of general use, wear and tear.

What allowances are available?

Annual Investment Allowance (AIA) offers tax relief at 100% on qualifying expenditure in the year of purchase, subject to some exceptions (e.g. cars).19942 MACO Tax Planning 35

First year allowances (FYA) enable practices to deduct a proportion of the cost of the assets purchased in the same tax year that they were bought. The remaining proportion is carried forward to the next year.

Writing down allowances (WDA) come into play when you wish to claim against the cost of an asset purchased during the year, for which you have not claimed FYA.

When should you seek advice?

Providing no previous claim has been made, you can make a claim at any time whilst you own the asset. So, it often pays to review your historic assets to ensure that you have claimed all the reliefs that may be available to you.MACO TPL business advisory

If you are planning to buy, build, extend, refurbish or sell the practice it is worth a call to us to discuss what may qualify before you begin the project.

Similarly, if you are planning to invest in new surgery equipment or a practice refurb, give us a call and we will give you an indication on whether your investment is likely to qualify.