Capital allowances

Question 1

What are some nuances we need to consider with the treatment of lighting for capital allowances

Answer 1

In general, lighting is more likely to be treated as an “integral feature” and will therefore be treated as a special rate pool item. However, in some circumstances, relief may be available under the plant treatment if it could be argued that the lighting is a key part of the companies trade (this would be a likely scenario for restaurants)

Question 2

What are preliminaries and how do they interact with capital allowances (including any relevant case law)

Answer 2

Preliminaries can be thought of as effectively “overheads” or “one-offs” which have been incurred while ongoing capital allowance works have taken place - i.e. either as temporary water supplies, security etc

So the relevant case law in this scenario would be the J D Wetherspoon case in which it was determined that costs of preliminaries could be apportioned between the element which is deemed to be capital (either MP or SR) and which is not.