Tax Question Of The Week – Plant Hire & CIS

My client is a contractor in the Construction Industry and has asked for clarification on the following issues regarding plant hire:

  • Should payments for plant hired by my client be included on the contractor’s monthly CIS300 return?
  • Can plant be claimed as materials by subcontractors?

Regulation 4 of SI 2005/2045 requires that monthly returns must be made by contractors including, amongst other things, the amounts of contract payments within s60 FA 2004 and the costs of materials where contract payments are made under tax deduction. It has always been a practical problem with CIS compliance in identifying which payments are within the scheme and so should be included in these returns. In addition, s61 FA 2004 allows the cost of materials to be excluded from the sums on which tax is deducted by the contractor without defining what is meant by materials.  As a result, most advisers will follow HMRC’s guidance on what payments are within the scheme and what constitutes materials.

Should Payments for Plant Hire be Included on the Contractor’s Monthly CIS300 Return?

Of primary importance is to distinguish between the hiring of plant with or without an operator. HMRC has summarised the position in CISR14260 as follows:

When a contractor hires plant from another person, the contractor needs to decide whether or not to apply CIS to the payments.

  • Payments for the hire of plant with an operator for use on site are within the scope of the CIS scheme and therefore, do need to be shown on the contractor’s monthly CIS300 return
  • Payments for the hire of plant without an operator are not within the scope of the CIS scheme and therefore, do not need to be shown on the contractor’s monthly CIS300 return.

Where the plant is scaffolding, HMRC provide separate guidance at CISR14030:

  • Where the contract is to supply and erect/dismantle the scaffolding, all payments under that contract should be included on the contractor’s monthly CIS300 return.
  • If the contract is for supply only (scaffolding hire, with no labour), none of the payments need to be included on the contractor’s monthly CIS300 return.

 

Can the Plant be Claimed as Cost of Materials?   

The direct cost of materials claimed by a subcontractor means what the subcontractor can demonstrate they paid for the materials in carrying out the work under contract.

  • If the subcontractor already owns the plant, it cannot be claimed as materials, as it is not a “direct cost to any other person of materials used or to be used in carrying out the construction operations to which the contract under which the payment is to be made relates” – S61(1) FA 2004. This includes plant already bought under a Hire Purchase Agreement. However, consumable items, for example the cost of fuel required to run/power the plant, may be claimed as materials.
  • If the subcontractor hires the plant from a third party, the cost of the plant hire and any consumable items, for example the cost of fuel required to run/power the plant, may be claimed as materials.

So, if a subcontractor shows plant as materials on their invoice, the contractor should ask whether they own the plant being supplied, or whether they have had to hire it in from a third party.  It is the contractor’s responsibility to check this under regulation 4 of SI2005/2045 (see CISR15060), and to submit complete and accurate CIS300 returns to HMRC.  The contractor may be liable for any tax arising from under-deductions or incomplete returns and be liable to associated interest and penalties.

HMRC will often query plant hire and materials during their compliance checks, and will often request evidence to show that the plant has been hired in from a third party.

HMRC have specific guidance on plant hire as materials in CISR15090 and in paragraph 3.14 of publication CIS340.

Tax Question Of The Week – Electric Cars

What are the benefit in kind rules for 2020/2021 for low emission cars and fully electric cars provided to employees as company cars?

Fully electric vehicles

 Employees are required to pay income tax on any benefits that they receive from their employer. The benefit in kind for company cars is calculated based on the car’s C02 emissions and the list price of the vehicle.

From 6 April 2020, the benefit in kind for fully electric cars is being reduced to 0% for the tax year 2020/2021. The Government’s summary of responses document published in July 2019 confirmed that:

“All zero-emission company cars will attract a reduced appropriate percentage of:

  • 0% in 2020/21
  • 1% in 2021/22
  • before returning to the planned 2% rate in 2022/23”

These reduced rates are applicable for cars registered before and after 6 April 2020. The July 2019 review can be found at:

https://www.gov.uk/government/publications/review-of-wltp-and-vehicle-taxes

The advance of these reduced rates will reduce the employee’s income tax liability, and save employers on their Class 1A National Insurance liability.

Fully electric cars will not have any fuel scale rate charges applied to them, as electricity is not a fuel. For reimbursement of mileage, you would use the approved electricity rate of 4p per mile. This rate is published under Advisory Fuel Rates on Gov.UK and the latest rates can be found at:

https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016

There are also tax advantages if you provide your employee with charging facilities at your workplace, and even for the installation of a vehicle charging point to be installed at the employee’s home.

For further guidance on the tax treatment of charging and mileage payments due to an employee using a fully electric vehicle, please see the below EIM reference:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900

Ultra-low emission vehicles

If a fully electric car is not available, there are also reduced rates for ultra-low emissions car with CO2 emissions of less than 75g/km.

For cars registered from 6 April 2020 with a range of more than 130 electric range miles, they will also benefit from the reduced appropriate percentage of 0% for the 2020/2021 tax year.

For cars registered before 6 April 2020 with a range of more than 130 electric range miles, they will benefit from the reduced appropriate percentage of 2% for the 2020/2021 tax year.

Employees who are in receipt of an ultra-low emission vehicle as a company car, they are able to have a salary sacrifice arrangement to run alongside the provision of the vehicle. The optional remuneration arrangement rules do not apply to cars with CO2 emissions of 75 grams or less per kilometer. Cars with CO2 emissions of 75 grams or less per kilometer continue to be taxed on the cash equivalent of the benefit without having to make a comparison with the salary foregone.

For further guidance on the tax treatment of charging and mileage payments due to an employee using a fully electric vehicle, please see the below EIM reference:

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim44060

Tax Question of the Week – Relief for Losses on Loans to Traders

My client, an individual, recently made me aware of a loan he had made to a trading company which has since ceased to trade and become insolvent. As a result there is a substantial sum left owing to him that he will never recover. I am aware that capital loss relief may be available in such circumstances and that the relief may be claimed in an earlier tax year. Can you please remind me of the conditions and limits in terms of how far the relief may be carried-back?

Section 253 of TCGA 1992 provides relief for irrecoverable amounts of loans made to traders in the form of a deemed capital loss, which can be relieved in the same way as an actual capital loss. Relief may therefore be claimed against capital gains of the year of claim or carried-forward to the first available gain(s) of subsequent tax years.

However, the legislation also permits a claim to specify an earlier date, not more than two years before the tax tear of the actual claim, provided that the amount was also irrecoverable at that earlier date. On this basis, my client could make a claim for the current tax year, but also for either of the two preceding tax years 2017/18 or 2018/19 if this were more beneficial, providing that it can be shown that the loan was irrecoverable in the earlier years.

The relief is claimed on the capital gains pages of the self-assessment tax return in the same way as an actual loss would be claimed.

HMRC’s view is that claims cannot be made for part-only of the amount outstanding at the time of claim, except in the following circumstances:

 “…a claim that a part of an outstanding amount of a loan has become irrecoverable may be admitted where:

  • the debtor has been placed in bankruptcy, receivership or liquidation: and
  • the receiver or liquidator has announced an anticipated dividend in respect of unsecured debts and has indicated that no further dividends are likely.’

(HMRC Capital Gains Manual, CG65956).

Relief under these provisions is also available to companies, but only where relief cannot be obtained under the Loan Relationships legislation (s.253(3) TCGA 1992).

Please note that for loans made before 24 January 2019 the borrower is required to be resident in the UK.  However, a proposed amendment in the 2019/20 Finance Bill is due to remove this condition so that claims can be made regardless of the borrower’s tax residency –  https://www.gov.uk/government/publications/capital-gains-tax-relief-on-loans-to-traders/capital-gains-tax-relief-on-loans-to-traders

Tax Question of the Week – Pension Annual Allowance

I have several Self-Assessment clients for whom I am concerned that the annual allowance charge (‘AAC’) is applicable but they have not received any statements from their pension schemes alerting them to the issue. What approach may I take to ensure that I’m correctly reporting the charge on the client’s tax return?

When we get calls to the advice line about the annual allowance charge, it often emerges that we can’t progress to discuss how the charge is calculated because the caller doesn’t have sufficient information from their client about pension inputs in the year.

The circumstances under which a pension scheme administrator must issue a statement to a scheme member are quite limited: broadly, that will only be where the member’s pension input amount for the tax year exceeds the annual allowance (reg. 14A SI 2006/567 – see HMRC’s Pensions Tax Manual PTM167100). However, the scheme administrator is looking at one particular pension arrangement in isolation but the AAC applies when pension inputs across all registered pension schemes exceeds the available annual allowance. Also, since 2016/17 there has been a possibility that the full annual allowance is tapered down to as little as £10,000 if the taxpayer’s income is sufficiently high. Therefore, for either or both of these reasons, it is perfectly possible that someone’s total pension input amount has exceeded the available annual allowance without triggering an automatic issue of a pension input statement from any of the schemes of which she is a member.

Where someone is contributing a to ‘Relief at Source’ arrangement (where their contribution is treated as being made net of Basic Rate tax that is then claimed from HMRC by the scheme) information on those contributions will usually be handed over to the accountant as part of the process of preparing the Self-Assessment Tax Return because that will be needed to claim relief from higher rate tax. The information can then be used very easily to establish the pension input to those schemes as a result of the individual member’s contributions. However, where the pension scheme is set up differently (for example NHS superannuation or an employer’s defined benefit scheme) the pension input amount cannot be calculated based on the contributions made by the member into the scheme.

As a matter of good practice, you could build into your procedures for gathering information for the return, a request that your client puts in a request to the administrator (as provided for by Reg. 14B SI 2006/567 – see PTM167300) for each of their scheme to produce a statement of pension inputs annually so that all of the information is available before work on drafting the SATR begins, even if the conditions for an automatic issue of the statement have not been triggered.

Tax Question Of The Week – Entertainment & Promotional Costs

Last year my client launched a new product and arranged a marketing event to publicise it. The expenditure was a mixture of food, drink, and promotional gifts and the hire of a conference center. I am preparing the tax computation for the company and so would any of this expenditure be disallowable?

When preparing the tax computation, you should adjust the trading profits by adding back disallowable items, such as any element of client entertaining as explained below.

Statutory background

The general rule is that no tax deduction is allowed in calculating the profits of a trade for expenses incurred in providing entertainment or gifts in connection with the trade (s1298 CTA 2009)

The term ‘entertainment’ is defined to include ‘hospitality of any kind’ and the expenses incurred in providing entertainment or a gift are defined to include ‘expenses incurred in providing anything incidental to the provision of entertainment or a gift’.

Establishing whether the costs are promotional or entertainment

HMRC’s view is that the food and drink costs are hospitality and so always disallowable under s1298 CTA 2009 – unless the hospitality provided is “minimal” (BIM45050).

In the case of Netlogic Consulting Ltd v HMRC (2005) SpC 477, the costs were split between food and drink provided and the cost of hiring the room. The courts found that the room hire was an allowable tax deduction because based on the facts of the case it was established that ‘the entertainment was incidental to the promotional purpose of the meeting, rather than the hire of the room being incidental to the provision of the entertainment’.

Check that the costs of advertising and marketing do not fall within the definition of entertaining. HMRC’s view at BIM45050 sets out to clarify the matter:

An example of allowable expenditure is an event arranged by a car manufacturer to allow potential customers to test drive new cars. However, if the manufacturer arranges a golf day at which test drives are available then only the direct costs of the test drives and of any publicity material provided are not disallowed by the legislation.

Similarly, the costs of a book launch at which food and wine are provided and where the author and invited guests are entertained together with journalists and booksellers is disallowable under the legislation. However, where any hospitality provided is minimal no disallowance need be made.’

Gifts provided at the event

If gifts were provided at the event there are four sets of circumstances within s1300 CTA 2009 (see BIM45065) which will not deny a tax deduction and relief will be due. These are:

  • Case A is where the gift is of an item which it is the trader’s trade to provide, and the item is given away in the ordinary course of the trade in order to advertise to the public generally.
  • Case B is where the gift incorporates a conspicuous advertisement for the donor.

However, this relaxation does not apply if:

  1. the item consists of food, drink, tobacco or of any token or voucher exchangeable for goods; or
  2. the cost of the gift to the donor, taken together with the cost to him of any other such articles given by him to that person in the same ‘basis period’, exceeds £50. In calculating this total, the cost of such items as are referred to in (a) above (food, etc.) are ignored;
  • Case C is where gifts are provided for the trader’s employees unless gifts are also provided for others and the provision for employees is incidental to the provision for others; and
  • Case D covers gifts given to a charity, to the Historic Buildings and Monuments Commission for England, and to the Trustees of the National Heritage Memorial Fund

Exceptions

S1299 CTA 2009 provides an exception to the business entertaining rule that concerns the entertainment of employees. Staff entertaining is allowable, so long as it is wholly and exclusively for the purposes of the trade and is not merely incidental to entertainment which is provided for customers (see BIM45033 and BIM45034) This includes a staff Christmas party or other event open to all employees provided by the employer.

There may, of course, be other tax repercussions involving VAT input tax recovery and BIK issues for employees.

Tax Question Of The Week – CGT and Gifts

My client wants to gift property to her children during their lifetime but does not want to use a trust. What are the main Capital Gains Tax (CGT) implications particularly in view of the compliance changes applying from April 2020?

A gift is a disposal for Capital Gains Tax (“CGT”) purposes. Furthermore, a gift from an individual to his/her children would constitute a disposal to a connected person (as defined in s.286 TCGA 1992) and so the deemed proceeds are the asset’s market value under s18 TCGA 1992.

CGT due on direct disposals of UK residential land by UK residents from April 2020 will be reportable and payable within 30 days of the completion date – Sch. 2 FA 2019.  This change is likely to create compliance and cash flow difficulties for many.

To assist with cash flow, clients who have an immediate CGT liability can make an election to pay the CGT in ten annual installments with the first installment being payable on the normal due date. The legislation can be found at s.281 TCGA 1992 and for gifts, the rules are as follows:

The installment provisions apply to assets that are disposed by way of gift where s.165 TCGA 1992 or s.260 TCGA 1992 cannot be claimed or where they have been claimed, have not been enough to defer the gain or in limited circumstances, where gift relief has been clawed back.

The assets on which relief is available are as follows:

  • land, or an estate or interest in land;
  • a controlling shareholding of a company’s shares or securities; or
  • shares or securities not comprising a controlling interest, but which are not listed on a recognised stock exchange. Shares traded on the Alternative Investment Market (AIM) do not fall under this definition (CG50255).

The installments include interest which runs from the normal due date and is compounded on the unpaid portion of the tax. The taxpayer can pay off any part of the outstanding balance at any time.

There is the risk of any unpaid installment becoming due immediately, with accrued interest if the asset gifted to a connected person is later disposed of for valuable consideration. Therefore the asset gifted to my client’s children should not be disposed of for consideration during the installment period otherwise all remaining installments become due and payable.

The taxpayer must give notice to HMRC in writing and HMRC state at CG66452 that this can be made at any time before the tax becomes payable.  If accepted, the tax can be paid by ten equal yearly installments the first of which is due on the day the tax would have been payable.

Where the property is disposed of before 6th April 2020, CGT is generally payable under self-assessment and payable on 31st January after the end of the tax year of gift. This leaves plenty of time to make the election.

The above-mentioned 2020 changes will create a practical problem in giving notice before the tax becomes due. Where a property is disposed of on or after 6th April 2020, a CGT return and the tax payment must be made within 30 days of the completion date – a much shorter notice period for the installment election. Even for those taxpayers within self-assessment, a CGT return and payment is still required unless its filing date falls after the date someone has either already filed a self-assessment tax return or is due to submit a self-assessment return (this latter date is usually 31st January after the tax year unless a notice was issued late by HMRC).

There are exceptions to the CGT return requirements e.g. no gain/no loss transfers and gains wholly covered by PPR. However, in view of the 30-day compliance deadlines, it will be important that clients are aware they must contact their agents early in the disposal process if they need assistance.

Tax Question Of The Week – Recent CGT Changes

My client is a non-resident individual. He has decided that he enjoys the sun so much that he will be selling his UK flat and commercial property also in the UK as he has no plans to return.  I understand that there have been some changes with regards to capital gains tax in 2019 and some further changes this year, in 2020. Please can you let me know what to look out for?

The changes that you refer to are set out in Schedule 2 of the Finance Act 2019 (‘FA 19’).

This schedule sets out the changes to the capital gains tax rules that apply to both UK residents and non-residents. However, there are some notable differences in how the new rules apply to those affected. My client is non-resident and as such both the rule changes from April 2019 and April 2020 will apply.  In contrast, the rule changes relating to UK residents principally apply from 2020.

The changes center around the filing date and the payment date. For context, let’s have a look at how these rules have evolved in recent years.

Between 2015 and 2019 a non-resident individual was subject to tax in the UK in respect of gains arising from a disposal of residential property (see Schedule 1B TCGA 1992 for a definition of a residential property gain). From 6 April 2019, the scope to tax has been extended to cover both residential and commercial property and therefore the disposal of both of his properties will now be subject to capital gains tax.  The scope has further been widened to include the direct disposal of UK land and the indirect disposal of the UK (via a “property rich company” for example).

From 2015 a filing date of 30 days was introduced for non-residents with some exceptions (for those caught within the Annual Tax on Enveloped Dwellings (ATED) for example).  Companies were excluded from April 2019 and from 2020 this exception has been removed for everyone else and all relevant disposals by non-residents, other than companies, will have to be reported within 30 days.

In contrast, whilst UK residents do not have the filing obligation if no gain arises and certain conditions are met (e.g. perhaps where they are claiming the main residence exemption), this is not the case for non-residents as they must file a return even if no tax liability arises. My client will have to file a separate return for each disposal unless they happen on the same day.

The payment obligation, set out in Para 6 Schedule 2 of FA 2019, states that payment of CGT will now be due by 30 days from completion for disposals from April 2020 regardless of whether the individual is within self-assessment or not.  For disposals, after April 2019 and before April 2020 it is possible for a non-resident’s payment obligation to be aligned with the self-assessment deadline of 31 January. This will be a noteworthy change and it may inform my client’s thought process.

Paragraph 6, FA 2019 onwards sets out the obligation to make a payment on account of capital gains tax.  The payment is due on the filing date of the 30-day return as referred to above. This might result in taxpayers paying CGT before a tax year has even ended (!) and having to estimate their liability based on their best guess of the tax band that the gain will sit in.

This whole process is further complicated by rules on which losses can be offset against the gain and the somewhat inevitable need to amend these returns to account. There are separate rules pertaining to companies.

Tax Question Of The Week – Dependant Pension Draw Down

My client is to benefit from their deceased spouse’s pension scheme and has been advised that, as their spouse died below the age of 75, they have the choice of receiving a tax-free lump sum or to take tax-free withdrawals from a Flexi-access fund. My client has asked for my advice and I am unsure what I should be considering.

The main tax consideration here will be Inheritance Tax (IHT) and, to a lesser extent, income tax.

 The important thing to remember is that a pension scheme, including a dependent’s/nominee’s Flexi-access fund, is outside the scope of Inheritance Tax. Therefore, you need to consider the options available in the context of how this will affect your client’s personal IHT position. It would appear that the spouse was a member of a Money Purchase (Defined Contributions) scheme.

Taking the tax-free lump sum will increase my  client’s personal estate and potentially risk being charged to IHT at 40% whereas leaving funds in the Flexi-access fund will remain out of the estate and can be passed on free of IHT. Although there may be an initial attraction of taking a lump sum or high withdrawals, this could be potentially expensive in IHT terms if the funds remain in the personal estate, whether as cash or converted into personal investments or assets. In addition, in view of the £2m estate cap applying to the Residence Nil Rate Band, the consequences of taking a lump sum or large withdrawals need specific consideration where there is a risk of a personal estate approaching this threshold.

Also remember that income on the Flexi-access fund will be tax-free within the fund, whereas income from personal investments will be chargeable to income tax. Therefore taking a lump sum or large withdrawals for personal investments, would have an income tax cost in addition to the potential IHT cost.

On the death of my client, any remaining funds within the Flexi-access fund can be paid to “qualifying persons” income tax-free if my client died before reaching 75, or charged to income tax at the recipient’s marginal income tax rates if my client dies over the age of 75. See HMRC’s guidance at PTM073600 for more information.

 There is no right or wrong decision here but my client should be made aware of the tax repercussions before they decide what is best for them.

Tax Question Of The Week – Training Costs

My client is a surgeon who is currently employed by the NHS. During the year, he has attended various training courses to enable him to keep up to date with changes in the profession and gain new qualifications to further his career. Can he deduct the cost of attending these courses from his employment income?

The legislation does provide for relief for the costs of work-related training under s250 ITEPA 03 but this will not apply to my client because relief is conditional on the costs being incurred or reimbursed by the employer.

Outside of this rule, to obtain relief for training costs paid for personally we need to look at the terms of s336 ITEPA 03 which requires that the employee is obliged to incur the expense as the holder of the employment and that the expense was incurred “wholly, exclusively and necessarily in the performance of the duties of the employment”.

It is HMRC’s view that training expenses incurred personally by an employee are not deductible under s336 ITEPA 03 even if the subject is relevant to the nature of the employment. This is based on the opinion that they are not incurred “in the performance of the duties of the employment” i.e. a surgeon’s job is to treat patients, not to attend training courses.

However, the case of R & C Commrs V Banerjee [2010] BTC 662 identified an exception to this long-standing view. The Court of Appeal accepted that a deduction for training costs incurred by an employee should be relievable under s336 ITEPA 03 where the employee was employed on a training contract and undertaking training was an intrinsic contractual duty of the employment.

Therefore HMRC may allow relief under s336 ITEPA 03 if the employee is employed under a training contract the terms of which meet the following criteria (as provided in EIM32535):

  • Training in an intrinsic part of the contractual duties
  • All other duties are being undertaken as part of the training
  • There is a mandatory requirement for the employee to undertake the external training as an intrinsic part of the duties of employment
  • Failure to complete the training and obtain the qualification will mean that the employee will not be able to continue in employment with the employer in the role that would otherwise have been available to them after qualification

Additionally, HMRC has identified a number of training courses specific to the medical profession where relief for training costs incurred will qualify for relief as, according to HMRC, they meet the above conditions. A list of these can be found in their Employment Income Manual at EIM32540. As my client works within the medical profession then if the courses he attended appear on this list then he can claim relief for the costs incurred.

Tax Question Of The Week – Annual Investment Allowance (AIA)

My client company has a year-end of 31st May 2019 and throughout the year the company incurred capital expenditure that qualifies for the annual investment allowance (AIA). How do we determine the amount of AIA available and how do we allocate the AIA to the qualifying expenditure given that the amount of AIA went up from £200,000 to £1m in January 2019?

For qualifying expenditure incurred since 1 January 2016, 100% AIA has been available for expenditure of up to £200k for the year. The Government introduced a temporary two-year increase to the AIA limit to £1m from 1 January 2019, which will revert to £200k on 1 January 2021.

Where we have a year-end that straddles 1 January 2019, there are transitional rules to determine the maximum AIA available for the year. This is simply calculated on a time apportionment basis by splitting the year into the period before 1 January 2019 and the period after 1 January 2019.


For your client, their maximum AIA available for the year would be as follows:

1 June 2018 – 31 December 2018 (7months) = 7/12 x £200k = £116,667

1 Jan 2019 – 31 May 2019 (5months) = 5/12 x £1m = £416,667

Maximum AIA available for the y/e 31 May 2019 = £116,667 + £416,667 = £533,334

Note – many callers think that due to the above calculation, this means only £116,667 of AIA is available for expenditure incurred before 1 Jan 2019, but this is incorrect. This time apportionment is to calculate the maximum AIA available for the year. There is, however, a different restriction to the qualifying expenditure available for AIA in the pre-1 Jan 2019 period – see below.


Whilst the above is the maximum AIA available for the year, there is a restriction for capital expenditure qualifying for AIA incurred in the period prior to 1 Jan 2019. Only a maximum of £200k of actual expenditure falling in the period before 1 Jan 2019 can qualify for AIA.

Example 1 – if my client incurs qualifying expenditure of £350k in the 7months to 31 Dec 2018, only £200k of this is covered by AIA. This will result in £333,334 (the max AIA available of £533,334 less £200k used) of AIA left for the 5months to 31 May 2019.

Example 2 – if my client only incurs £125k of AIA expenditure in the pre-1 Jan 2019 period, this leaves available AIA of £408,334 (max AIA of £533,554 less £125k used) for the 5months to 31 May 2019.

There are some similar transitional provisions that apply for periods straddling 1 Jan 2021 when the AIA reverts. We still use time apportionment to determine the maximum AIA available for the year. However, for the part of the straddle period that falls after 1 Jan 2021, the AIA available is restricted to the proportionate amount of £200k e.g if we have a 30 April 2021 year end, only 4/12 x 200k = £66,667 of AIA is available for expenditure incurred in that post 1 Jan 2021 period.

Therefore, for those clients that may have periods straddling 1 Jan 2021, we should bear in mind when the capital expenditure is to be incurred to make use of the maximum AIA available.

The straddling provisions can be found in Schedule 13 of FA 2019.

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