December Question and Answer Corner

Newsletter issue - December 07.

Q. I own a number of house-boats which are permanently moored and are let as holiday accommodation. Can I claim capital allowances on the cost of acquiring similar new boats?

A. The Taxman will normally only give capital allowances for boats or caravans if they are regularly moved and do not occupy a fixed site, although there are exceptions for caravans on registered sites. As the house-boats are in a permanent location the Taxman will view them as buildings, which do not qualify for capital allowances, although some of the fixtures and fittings for the boats may qualify.

Q. My company makes a regular donation to the local youth club­, is this expense tax deductible for my business?

A. If the youth club is a registered charity your company can make a donation under the gift aid scheme and achieve tax relief for the business and the charity. The Taxman also allows deductions for small donations to local bodies such as churches where there may be a benefit to the employees and their families. The youth club may qualify under this concession.

Q. I've heard I will soon get the first £100,000 on the sale of my business tax free. Is that true?

A. This is a rumour about retirement relief released by the Prime Minister's office to soften the blow for small businesses, who are upset about the withdrawal of business asset taper relief from 6 April 2008. However the Treasury refuses to comment specifically on this idea, so we can't be sure that the proposed relief will actually come into force. If there is to be a new form of retirement relief for small businesses, there are indications there will be some announcement on softening the blow of the loss of taper relief before Christmas, but there are no guarantees! We will keep you updated with any news on the subject in this newsletter.