Some capital allowances are available only to companies. Examples include the ‘super-deduction’ for expenditure between 1 April 2021 and 1 April 2023, and the ‘full expensing’ for expenditure between 1 April 2023 and 1 April 2026.
It has been widely supposed that this means that these allowances are not available to partnerships or LLPs (which are not, of course, ‘companies’).
However, HMRC have recently revised their published guidance to make it clear that this is not the case (Capital Allowances Manual at CA11145). Where a company is a member of a partnership, the computation of partnership profit in relation to that company should be made as though the partnership itself were a company, including ‘company-specific’ reliefs where appropriate.
This does not mean that in the case of a ‘mixed partnership’ with some corporate members and some individual members, the individual members will be able to claim these reliefs: the computation of partnership profit in relation to individual members is made using the computational rules applicable to individuals and therefore excludes ‘company-specific’ reliefs.
None of this affects the Annual Investment Allowance. This continues to be available only to expenditure incurred by a ‘qualifying person’: a term which is defined by law to mean (a) an individual, (b) a partnership of which all the members are individuals or (c) a company. Mixed or fully-corporate partnerships and LLPs are thus excluded from claiming AIA.
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Capital allowances and partnerships
Some capital allowances are available only to companies. Examples include the ‘super-deduction’ for expenditure between 1 April 2021 and 1 April 2023, and the ‘full expensing’ for expenditure between 1 April 2023 and 1 April 2026.
It has been widely supposed that this means that these allowances are not available to partnerships or LLPs (which are not, of course, ‘companies’).
However, HMRC have recently revised their published guidance to make it clear that this is not the case (Capital Allowances Manual at CA11145). Where a company is a member of a partnership, the computation of partnership profit in relation to that company should be made as though the partnership itself were a company, including ‘company-specific’ reliefs where appropriate.
This does not mean that in the case of a ‘mixed partnership’ with some corporate members and some individual members, the individual members will be able to claim these reliefs: the computation of partnership profit in relation to individual members is made using the computational rules applicable to individuals and therefore excludes ‘company-specific’ reliefs.
None of this affects the Annual Investment Allowance. This continues to be available only to expenditure incurred by a ‘qualifying person’: a term which is defined by law to mean (a) an individual, (b) a partnership of which all the members are individuals or (c) a company. Mixed or fully-corporate partnerships and LLPs are thus excluded from claiming AIA.
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