Depreciating infrastructure and fencing costs

Siamsa Sessions

Hi all,

I know you can claim VAT back on fencing and other infrastructure-related costs, but has anyone ever had any issue depreciating the ex-VAT cost of fencing/infrastructure over 8 years?

According to the DAFM website, you're allowed a Capital Allowance for Farm Buildings and Other Works:

"An allowance is available on the construction of farm buildings (excluding dwelling house), fences, farm roadways, holding yards, drains, land reclamation and other ancillary works such as walls, water and electrical installation as a relief against income tax over a seven year period for capital expenditure.
The rate of the farm buildings capital allowance is 15 per cent of the capital expenditure for each of the first 6 years of the 7 year period with the balancing 10 per cent, allowed in year 7."

I asked someone in the accountancy world and they said you couldn't depreciate but the above seems to say you can.

So, would you be OK claiming 15% of the cost of stakes, wire, gates, etc. as an allowance in your annual tax return for the next 6 years?

Thanks

Panch18

Siamsa Sessions wrote: »

Hi all,

I know you can claim VAT back on fencing and other infrastructure-related costs, but has anyone ever had any issue depreciating the ex-VAT cost of fencing/infrastructure over 8 years?

According to the DAFM website, you're allowed a Capital Allowance for Farm Buildings and Other Works:

"An allowance is available on the construction of farm buildings (excluding dwelling house), fences, farm roadways, holding yards, drains, land reclamation and other ancillary works such as walls, water and electrical installation as a relief against income tax over a seven year period for capital expenditure.
The rate of the farm buildings capital allowance is 15 per cent of the capital expenditure for each of the first 6 years of the 7 year period with the balancing 10 per cent, allowed in year 7."

I asked someone in the accountancy world and they said you couldn't depreciate but the above seems to say you can.

So, would you be OK claiming 15% of the cost of stakes, wire, gates, etc. as an allowance in your annual tax return for the next 6 years?

Thanks

You'd want to be putting that full cost through in the 1 year as maintenance. a couple of grand divided over 7 years isn't going to do much for you

foxirl

Siamsa Sessions wrote: »

Hi all,

I know you can claim VAT back on fencing and other infrastructure-related costs, but has anyone ever had any issue depreciating the ex-VAT cost of fencing/infrastructure over 8 years?

According to the DAFM website, you're allowed a Capital Allowance for Farm Buildings and Other Works:

"An allowance is available on the construction of farm buildings (excluding dwelling house), fences, farm roadways, holding yards, drains, land reclamation and other ancillary works such as walls, water and electrical installation as a relief against income tax over a seven year period for capital expenditure.
The rate of the farm buildings capital allowance is 15 per cent of the capital expenditure for each of the first 6 years of the 7 year period with the balancing 10 per cent, allowed in year 7."

I asked someone in the accountancy world and they said you couldn't depreciate but the above seems to say you can.

So, would you be OK claiming 15% of the cost of stakes, wire, gates, etc. as an allowance in your annual tax return for the next 6 years?

Thanks

Rightly or wrongly I claim 12.5% over 8 years as capital allowance on gates and fencing anyway.

duffysfarm

If you write all the amount off as repairs in year 1 then you cant claim back vat.
If you claim back vat then you are stating that it is a capital item and thus written off over 8 years. You can only claim back the vat on capital items and not repairs.

Siamsa Sessions

Thanks for the replies.

It’s one or the other then:

* Full cost against tax as repairs in year 1

Vs

* VAT back in year 1 and 12.5% of costs against tax as capital allowance for 8 years

And related: if you have put full costs in as repairs in previous years, you can’t retrospectively claim VAT now?

duffysfarm

Yes, one or the other

I wouldn't say you could claim back the vat on prior years. Have a look at the vat 58 form and it says something about repairs v capital allowance on it from memory

Siamsa Sessions wrote: »

Thanks for the replies.

It’s one or the other then:

* Full cost against tax as repairs in year 1

Vs

* VAT back in year 1 and 12.5% of costs against tax as capital allowance for 8 years

And related: if you have put full costs in as repairs in previous years, you can’t retrospectively claim VAT now?

Siamsa Sessions

duffysfarm wrote: »

Yes, one or the other

I wouldn't say you could claim back the vat on prior years. Have a look at the vat 58 form and it says something about repairs v capital allowance on it from memory

Sound job. I'll check the VAT 58 form

Panch18

duffysfarm wrote: »

If you write all the amount off as repairs in year 1 then you cant claim back vat.
If you claim back vat then you are stating that it is a capital item and thus written off over 8 years. You can only claim back the vat on capital items and not repairs.

Would it be correct to say that if you are in the high tax bracket that you’ll get 50% of the vat back anyway if you go down the 1 year route?

duffysfarm

Yes, you are correct and this is a very good observation

Panch18 wrote: »

Would it be correct to say that if you are in the high tax bracket that you’ll get 50% of the vat back anyway if you go down the 1 year route?