Farms and Capital Allowances
Buildings
With no tax relief available on buildings it is important to ensure that relief is maximised on
anything that qualifies for capital allowances as plant in order to minimise any tax liabilities arising
in a business. Repairs to buildings are fully allowable, however please note the replacement of a
whole range of buildings is treated as new and an improvement whereas replacing part of an
entirety of buildings should qualify as a repair. Both new and second hand items of plant qualify for
tax relief.
Qualifying expenditure can include the transportation of plant, installation costs and alterations to
land and buildings to install it, as well as the removal of existing plant and professional costs
associated with planning applications.
Plant Items
The obvious items that qualify as plant are functional, moveable, implements and vehicles and
include tractors, combines, sprayers, trailers, foragers, trucks, rollers, drags, ploughs, cutting
machines, diggers, lorries, fork-lifts, computers, desks, light fittings etc. Other items that qualify are
no so obvious!
Relief is available on expenditure on plant and equipment at a rate of 100% up to the Annual
Investment Allowance (AIA) – currently £500,000 reducing to £25,000 with effect from 1 January
2016. For expenditure in excess of the AIA, a writing down relief is available at a rate of 18% on a
reducing balance basis. Items that qualify as Integral Features can obtain 100% relief as part of the
Annual Investment Allowance (AIA), however where expenditure in a year is in excess of the AIA,
relief can be claimed on these items at a rate of 8% on a reducing balance basis rather than 18% as
for other expenditure on plant.
Items that specifically qualify as plant but are perhaps not so obvious include the following:
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Feed bins
Grain silos for temporary storage
Bulk tanks
Milking parlours
Rainwater and filtration equipment. These items may qualify for 100% ECA relief in any
event – if in doubt check with www.eca.gov.uk
Gutters, pipes, fittings and tanks to store rainwater
Slurry/sewerage systems. Where slurry is stored (and most is) in a sealed container all the
costs of tanks (above or below ground), concreting, digging out the site, sealed walls and
flooring (including slatted floors) should qualify
Silage stores and all related expenditure
Small scale slurry and sludge dewatering equipment
Cleaning systems in dairy parlours
Feed handling systems / tanks / bins
Moveable barriers, pens, unboltable cubicles
Drinking troughs, sinks, basins, taps, water meters (these items may qualify for 100% ECA
relief in any event – if in doubt check with www.eca.gov.uk) and related pipework
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Fire / smoke alarms
CCTV systems
Computer and telecom equipment
Fish tanks, ponds
Fans
Temperature gauges, humidity, light and water meters
Pig Arks intended to be moved – see attached HMRC Brief 03/10
Concrete pads surrounded by low level barriers for temporary storage of manure – see
attached HMRC Brief 03/10
Wind turbines / PV units
Energy saving systems (these items may qualify for 100% ECA relief in any event – if in
doubt check with www.eca.gov.uk)
Office furniture and equipment
Equipment in staff accommodation
Functional doors (automatically shutting)
Caravans and mobile homes for staff accommodation
Chicken houses on skids designed to be moved
Coldroom
Fridges
Burglar alarm systems, lifts, escalators and moving walkways***
Space and water heating systems***
Air-conditioning and air cooling systems***
Hot and cold water systems (but not toilet and kitchen facilities) – these only qualify from
the point of entry to a building and distributing throughout***
Electrical systems, including lighting systems – as above, these only qualify from the point of
entry to a building***
External solar shading***
*** - These items qualify as integral fittings and attract writing down allowances at a rate of 8% once
the AIA limit has been exceeded
Some areas that may qualify, but will need careful consideration and review and as such can be more
tricky include:
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Concrete floors acting as sealed slurry units, but also for storing animals. In a dairy cubicle
building arguably the scraper / slurry channels will qualify, but the bedding areas will not.
Moveable sheds – these should qualify if unboltable, designed and intended to be moved,
however it may be necessary to demonstrate that this is the case.
Doors – if just doors to a building these are not allowable unless they are part of a piece of
functional apparatus or an automatically closing fire door
The percentage of integral fittings such as kitchens, showers, bathrooms, central heating,
lighting, cookers in farmhouses used for business, or in workman’s cottages or dwellings
count as plant – see attached HMRC Brief 03/10
Glasshouses – fully integrated automated temperature and humidity controlled sealed
glasshouses qualify. Glasshouses with no control systems do not qualify.
Roofs or covers for slurry stores and silage clamps. The Revenue may regard this as a
building. If the ‘cover’ can only be used and is specifically designed for use as part of the
plant relief should be available.
Items not qualifying as plant:
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Water, electricity or gas connections to be the farm itself
Tunnels
Bridges
Ditches
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Fencing
Hardstanding areas
Reservoir
Dam
Enhanced Capital Allowances (ECA)
Please note where items qualify for the ECA, 100% relief is given on the expenditure over and above
the Annual Investment Allowance (AIA). As such, if the full AIA has been utilised elsewhere, items
qualifying for the ECA can obtain additional 100% relief over and above this figure.
To qualify for the ECA, the items purchased must be specifically listed.
Summary
As you can see from the various lists above, there is potentially a far greater level of relief available
on expenditure on items of plant relating to property than may initially be evident. It is very
important however to ensure invoices are obtained for the cost of the building structure separately
from the plant items so it is clear which items you are claiming relief for and which you are not.
If in doubt, take advice!
www.davisons-uk.com
May 2015
Disclaimer:
The contents of this factsheet are intended to inform, not offer specific advice on your individual circumstances. If you think the
points covered may be to your benefit, please contact us for further advice. We cannot accept any responsibility for any financial
loss incurred as a result of reading and acting on this factsheet without receiving individual advice and our written endorsement