IFM08320 - Co-ownership Authorised Contractual Schemes (CoACS): Capital allowances: introduction
CoACS are transparent for the purposes of capital allowances, so the investor – not the scheme – may be entitled to claim capital allowances subject to the normal rules. However, the operator of the CoACS holds the information which investors require to calculate their entitlement to capital allowances.
Plant and machinery allowances
To avoid the need for exchanges of information between the operator and investors, the government introduced a simplified basis of calculating plant and machinery allowances whereby the operator of a CoACS may elect to calculate the allowances and allocate them to investors. That simplified basis is provided for by sections 262AA-AF of the Capital Allowances Act 2001 (“CAA01”), which were inserted by section 40 of the Finance (No 2) Act 2017.
The simplified basis is elective because some CoACS have only or mainly investors who are exempt investors, and who therefore are not entitled to claim capital allowances. To impose the simplified basis on those CoACS would be an unnecessary administrative burden. Any CoACS may elect to use the simplified basis – not just those with exempt investors. The operator may elect not to use the simplified basis.
IFM08330 explains the simplified basis in detail.
Structures and buildings allowance
This new capital allowance was introduced by Finance Act 2019 - further guidance on the special rules for COACS will be provided in due course.