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Newsletter issue - January 2013.
Does your business use a polytunnel or glasshouse?
In the past the Taxman has refused to allow a tax deduction for the cost of such structures, on the basis that greenhouses are buildings. A greenhouse is generally expected to last several years, so the cost of the structure should be treated in the business accounts as 'capital' rather than as a 'revenue' expense. The cost of capital items cannot be deducted from annual profits, as the total expenditure must be spread over the life of the asset, using capital allowances. However, no capital allowances are given for the cost of buildings and similar structures (as opposed to the equipment they contain).
Now the Taxman has changed his mind. Polytunnels can qualify for capital allowances in certain circumstances, such as where the tunnel is moved around to aid the growth of particular crops in different areas at different times. If the primary function of the polytunnel is to provide shelter for livestock or stores, it will be regarded as 'premises' and not qualify for capital allowances.
A glasshouse may qualify for capital allowances if it contains, as part of the structure, permanently installed computer controlled equipment that automatically adjusts the heat and humidity inside the glasshouse. Unheated glasshouses will not qualify for capital allowances, as the Taxman views these as fixed buildings which happen to be made of glass.
The good news is that this change of approach comes into effect immediately, so all open claims for capital allowances on polytunnels or glasshouses can be settled in line with the Taxman's new guidance. If you have had a claim for capital allowances refused based on the old guidance, you can ask the Taxman to reconsider your claim.
