Category: Tax Advice

Resurfacing – Repairs or Capital?

Any business owner whose property includes a road, driveway, or parking area, will have to repair those surfaces at some point. The question is whether to charge the costs to ‘repairs’ or to ‘capital improvements’ in the accounts.

This decision has significant tax consequences, as the cost of repairs will qualify for a tax deduction, but capital improvements will not. Capital expenditure on improvements or renewals doesn’t get a tax deduction until the property is sold. Capital allowances can’t be claimed for the cost of laying roads or the structure of buildings, except in rare cases where the facility is used for research and development.

Tax Inspectors frequently challenge the cost of repairs in business accounts, particularly where the sum expended in one year is large. The Inspector may argue that where a road is resurfaced, the work should be treated as a renewal (capital) and not a repair. However, following a number of tax cases on this issue HMRC has changed its official guidance to its Tax Inspectors. The new guidance states that where a road has been resurfaced, that amounts to a repair and not a renewal or a replacement, so the cost is tax allowable.

There are still many grey areas which can be argued to be one side of the capital/repairs line or the other. If you need a second opinion on the tax deductibility of your property expenses, please do ask us.

Under the Approved Mileage Allowance Payments (AMAP) Scheme employers can pay employees tax-free mileage rates when they use their own car for business. Provided that the amounts paid do not exceed the approved rares set by the Tax Office, no tax or national insurance liability arises and there is nothing to report to the Tax Office on form P11d

However, many employees are unaware that they can claim a tax deduction for the shortfall if their employer pays them less than the approved rate. The current approved rates are 45p/mile for the first 10,000 miles in a tax year and 25p/mile thereafter. Please contact Paul on 0161 962 1855 to make your claim.

Had a penalty for late submission of your P35 for the tax year ended 5 April 2011?  We may be able to appeal against this for you if you have a reasonable excuse.  The definition of reasonable excuse is not defined in statute and the words must take their ordinary meaning. We have accumulated a number of decided tribunal and court cases to help win the argument.  Let us help you fight back against an unfair tax system. Ring Paul on 0161 9621 1855

From April 2012 the Annual Investment Allowance is reducing from £100,000 to £25,000. If you are in business, now is the time to invest for the future. If you need new business equipment ( including commercial vehicles ) do so before 31/3/2012 and take advantage of the significant tax breaks. Ring Paul on 0161 962 1855 to discuss further.

Looking to set up your own company? Want to pay the least amount of tax as legally possible? Let us explain it all to you in plain English and take the hassle out of operating your own company with our easy to use systems.

HMRC acted swiflty to avoid the wrath of the taxpayer over the call centre strike planned for 31 January by extending the Self Assessment deadline until Thursday 2 February.

It’s a New Year and it’s the time to plan ahead.  Use your experiences of the past to adapt for the future.   Rediscover your entrepreneurial thoughts, revisit your business plan and set yourself some targets.  Work on your business not in it and you will reap the rewards of business success.  We are doing it, our clients are doing it and we encourage you to do it.  Need our help, then give us a call at a&c chartered accountants on 0161 9621 855