John M Shanahan & Co.

linking practice to business

Chartered Accountants
Registered Auditors

Phone: 057 93 22100

email: info@shanahan.ie

Capital Allowances

Certain expenditure is of a “capital” nature, i.e. invested in buildings, equipment, motor vehicles, etc.

Because such assets will be used in the business over a number of years, you will be entitled to an allowance, generally based on the cost of the asset, for most equipment (furniture, displays, motor vehicles etc.), spread over a number of years.

 

Plant & Machinery

Expenditure incurred on or after 4 December 2002 on plant and machinery, fixtures and fittings etc, may be written off at 12.5% per annum on a straight line basis over an 8 year period (previously 20% per annum over 5 years).

If you dispose of an item of machinery or plant on which capital allowances were claimed, and the disposal results in an underclaim (or overclaim) of allowances, you may be due a balancing allowance (or subject to a balancing charge).

Motor Vehicles

The annual allowance for motor vehicles (other than taxi and short-term hire vehicles) is 12.5% on a straight line basis for expenditure incurred on or after 4 December 2002 (previously 20% per annum on a straight line basis). A car (new or secondhand) costing over €24,000 is given an annual 12.5% wear and tear allowance as if the car’s purchase price were €24,000.

The capital allowances and leasing deductions of cars bought or leased since 1 July 2008 are based on the level of carbon emissions (see Benefit in Kind, above). Cars with emissions above 190g/km get no allowance.

A taxi or short-term hire car is given an unrestricted write off of the purchase price at 40% per annum on a reducing balance basis.

 

Industrial Buildings

If you purchase an industrial building for your business, you may be able to claim:

(a) an industrial building annual allowance (known as a writing down allowance),

(b) an industrial building accelerated writing down allowance (also known as “free depreciation”), or

(c) an industrial building (initial) allowance.

 

Industrial buildings annual allowance may be claimed at the following rates:

An annual allowance of 4%, straight line, may be claimed in respect of expenditure on industrial buildings used for manufacturing purposes. Accelerated allowances are available in certain circumstances.

If the disposal of an industrial building on which capital allowances were claimed results in an underclaim (or overclaim), a balancing allowance (or charge) may arise.

Industrial buildings annual allowance may be claimed at the following rates:

(a) A rate of 15%, in respect of expenditure on:

(i) palliative care units (hospices),

(ii) private convalescent facilities,

(iii) private hospitals,

(iv) registered nursing homes,

(v) sports injury clinics.

 

(b) A rate of 10%, in respect of expenditure on:

(i) buildings for intensive livestock production,

(ii) market gardening structures.

 

(c) A rate of 4%, in respect of expenditure on:

(i) airport buildings, structures, runways, aprons,

(ii) camp/caravan site buildings and structures,

(iii) factories, mills, dock undertakings,

(iv) mineral analysis laboratories,

(v) hotels.

 

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