Enhanced Capital Allowance (ECA) Case Study
X Limited incurs £100,000 on the following assets as part of an office fit out; (1) New lighting £30,000; (2) Sanitary ware £5,000; (3) Boiler £25,000; (4) Air conditioning £20,000; (5) Building improvement work £20,000.
With no specialist advice items 1, 3 and 4 may only attract the 10% rate of allowances and item 2 will attract the temporary 40% rate of allowances. Item 5 is unlikely to attract tax relief. In the first year the total allowances are therefore £9,500 (((£30,000 + £25,000 + £20,000) x 10%) + £5,000 x 40%).
If specialist advice is obtained before the items are purchased, items 1 to 4 could all qualify for 100% ECA. Therefore in the first year the total allowances are increased to £80,000 ((£30,000 + £5,000 + £25,000 + £20,000) x 100%). This is a first year increase of £70,500.
WM Energy have considerable experience with ECA claims and working with clients in order to obtain significant cash-flow and tax savings call us today for a consultation.
