Termination of allowances
Termination of carry forward of certain unused capital allowances
Chapter 4A of Part 12 of the Taxes Consolidation Act 1997 (introduced in Finance Act 2012) provides for a termination of the carry-forward of certain unused capital allowances after the “tax life” of the relevant building or structure has ended. This measure comes into effect this year (2015) or in subsequent years, depending on when the “tax life” of a building or structure ends.
The arrangements apply only to the various accelerated property and area-based capital allowance schemes.
With effect from 1 January 2015, any unused accelerated capital allowances, which are carried forward beyond the “tax life” of the building or structure to which they relate, are immediately lost. This essentially means that if the “tax life” has ended at any time up to the end of 2014, then the unused allowances are lost in 2015. Where the “tax life” is due to end later than 2014, then the allowances are lost in the year following the end of the “tax life”.
Taxpayers and agents are reminded when preparing Capital Allowances Computations, in order to complete the Form 11 or CT1 for 2014, that they should adjust the 2015 carry forward (c/f) amount, for inclusion in their subsequent return, to take account of any building or structure whose “tax life” has ended in 2014 or prior, where any unused capital allowances fall within Chapter 4A of Part 12. This will ensure that the amount brought forward (b/f) for the purposes of the Capital Allowances Computation for 2015 will be correct.
Chapter 4A of Part 12 does not affect the following:-