Capital allowances on a brewery fit-out
Ravenswood Brewing Ltd, a small independent brewery, is fitting out a new site. In its accounting period to 31 March 2025 it incurs: £1,200,000 construction cost of a new warehouse (contract signed in 2024; excludes land); £200,000 new brewing tanks; £150,000 new electrical installation, including wiring and distribution boards, which is an integral feature; £35,000 new delivery van; £22,000 second-hand car for the sales director, CO2 emissions 130g/km; £40,000 repairing the warehouse roof after storm damage; and £80,000 new refrigeration and cellar cooling equipment. The warehouse is new and has not been used before. The company is profitable, pays corporation tax at the main rate and is not part of a group. Ravenswood has not claimed any capital allowances yet and wants to maximise its claim.
1. Classify each item and state the available capital allowance treatment.
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Classify each item by its nature and use:
- New warehouse construction £1,200,000: structures and buildings allowance, 3% straight line = £36,000. The contract was signed in 2024, after 29 October 2018, so SBA is available. Land is excluded.
- Brewing tanks £200,000: plant and machinery, main pool. New and unused, so full expensing or AIA at 100%.
- Electrical installation £150,000: integral feature, special rate pool. It is not main-pool plant, so full expensing is not available, but AIA can be claimed.
- Delivery van £35,000: new and unused, plant, 100% FYA or AIA.
- Second-hand car £22,000, 130g/km: cars are excluded from AIA and full expensing. Emissions over 50g/km put it in the special rate pool, WDA 6% = £1,320.
- Roof repair £40,000: revenue repair, deducted in the profit and loss account, not capital allowances.
- Refrigeration and cellar cooling £80,000: plant, main pool, 100% full expensing or AIA.
2. Calculate the maximum capital allowances for the period.
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To maximise, use AIA on the electrical installation because full expensing is not available for special-rate integral features. The AIA limit is £1m, and total plant is £465,000 (200,000 + 150,000 + 35,000 + 80,000), so all can be covered. Alternatively, use full expensing on the main-pool items and AIA on the electrical installation; the total is the same.
Maximum allowances:
- AIA on tanks, electrical, van, cooling: £465,000
- SBA: £36,000
- Car WDA: £1,320
- Total: £502,320
The roof repair £40,000 is a revenue deduction, not a capital allowance, so it reduces taxable profit separately.
3. Explain the ordering of claims and any risks in the company's approach.
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The order of claims matters only if the AIA limit were exceeded. Here it is not. The company should not claim AIA on the car because cars are excluded. It should also check that the electrical installation is not part of the warehouse construction cost; if it is, the SBA and AIA claims must not overlap. The SBA is claimed on the construction cost excluding plant. The car's 6% WDA is written down each year. If the company later sells the warehouse, the SBA is not clawed back but the purchaser may be able to claim on the residue.