Do Glamping Pods Qualify For Capital Allowances? (Explained)
Capital allowances are helpful for taxpaying business owners as they help them offset expenses on assets. Thus, any business owner would be eager to enjoy this benefit.
Also, the same applies to owners of glamping pods, as glamping pods offer a more comfortable camping experience than tents. However, the extra comfort comes at an extra cost.
Thus, it’ll be helpful to know if glamping pods qualify for capital allowances as they lessen the burden of running costs.
Glamping pods can only qualify for capital allowances when they fulfill marked-out criteria. One important condition is that the glamping pods must be subject to tax and capital expenditure. Also, the glamping pods shouldn’t occupy a fixed spot but be moveable. So that means a glamping pod will not qualify for capital allowances if it maintains a permanent position.
Enjoying a system that reduces running costs for your glamping pods is a welcome development. Thankfully, you’ll get all the information you need here.
This article will detail capital allowances, the benefits, and how to claim the allowances. Also, you’ll learn the criteria for capital allowances and other tax allowances.
What Do Capital Allowances Cover, and Why Are They Beneficial?
Generally, capital allowances cover a business’s equipment, machinery, and vehicles. Vehicles in the category aren’t limited but could be cars, lorries, or vans.
Since these assets are relevant to your business, they’ll incur running costs to maintain them. Thus, capital allowances serve as a relief to deduct such costs before paying taxes.
So, when your asset qualifies for capital allowances, you can deduct the running costs (capital expenditure) from your profit. After that, you can then calculate your tax bill.
You’ll see that deducting the running costs from your profits returns part of the expenses to your opening account. Next, it lowers the profit on which you pay tax.
At this point, the yearning for capital allowances may go through the roof. However, you need to fulfill certain criteria to enjoy the benefits.
Another important point to note is that there are different capital allowances. Also, the amount you’ll be able to claim depends on the type your asset qualifies for.
The most common capital allowances exist based on capital expenditure on plant and machinery, some commercial buildings, and research and development.
Thus, claiming the relief reduces the calculated profit for corporation tax, effectively lowering the tax bill. You can see that’s a great help for business owners.
Also, a critical look at capital allowances shows that they offset costs beyond reducing tax bills. Thus, the government relatively incurs the costs via capital allowances.
However, just how much in capital allowances can a business claim? First, it’s important to note that capital allowances only cover expenses within a single accounting period.
Thus, you can only claim capital allowances for your assets within the same accounting period you pay your tax. That means you can’t accumulate capital allowances.
As such, that measure helps to check the capital allowances businesses claim for their assets and prevents accounting headaches.
If that wasn’t the case, it could be possible for businesses to file certain expenses under capital expenditure. That could happen for years and strike out a profit when it piles up.
In that instance, a business will not have to pay corporation tax since there’s no calculated profit.
However, since capital allowances are for only a single accounting period, a business will always have a profit to pay tax.
Thus, capital allowances help business owners to offset capital expenditure on assets, thereby reducing their corporation tax.
Can You Claim a Capital Allowance for Your Glamping Pod?
Yes, you can claim a capital allowance for your glamping pod. Glamping pods are first privy to capital allowances because they rank among items in the main pool.
The main pool highlights assets that are plant and machinery. That category also includes furniture and fittings. Thus you’re clear to apply for the main pool allowances.
Next, there are some criteria you must fulfill before your glamping pod qualifies to claim the allowance.
First, your glamping pod must be moveable as per regular trade usage. Thus, it shouldn’t occupy a fixed location, or it won’t qualify for capital allowances.
Next, you should incur capital expenses on your glamping pod. That means the costs shouldn’t be on the account of another individual.
Also, the glamping pod mustn’t be a gift to you, but you got it yourself. Even if you use gift items to run your business, they don’t qualify for capital allowances.
The third condition is that only certain expenses count as capital expenses. That means you may not get tax relief on all the money you spend on your glamping pod.
For instance, expenses to repair the damage you inflicted on your glamping pod will not count under capital expenditure.
However, only money you use for normal maintenance of your glamping pod for business purposes will count.
Below are some costs you can deduct from your calculated profit when claiming capital allowances.
- Data and power installation costs.
- Expenses on white goods (any major electrical goods).
- Fitted carpets.
- Heating costs.
- Lighting costs.
Thus, you may only deduct expenses in the above categories from your calculated profit when claiming capital allowances.
Then you may apply for capital allowances when you meet the listed criteria. The table below shows the types you can claim for your glamping pod.
| Capital Allowance | Description |
|---|---|
| Annual Investment Allowance (AIA) | You get 100% tax relief for capital expenses in the same taxation year. |
| Writing Down Allowance | Being in the main pool, your glamping pod can qualify for 18% annual tax relief. |
Besides these two capital allowances, we also have First-Year Allowance (or Enhanced Capital Allowance) for eco-friendly machinery.
Also, there’s the special rate pool covering integral features, and it offers a tax relief of 6% per annum. Thus, you can claim capital allowances for your other assets too.
Do Glamping Pods Sited on Business Premises Qualify for Capital Allowances?
Glamping pods on business premises will only qualify for capital allowances if they meet the qualifying criteria.
Most importantly, your glamping pod should be a moveable structure, not a permanent one on site.
Next, consider other criteria like capital expenses, gifting, and the taxation year. As noted above, you must incur capital expenses at the time.
Also, you’re only eligible to claim tax relief on capital expenses within the year of taxation. Thus, you’ll lose capital allowances on expenses outside a taxation year.
To avoid missing out on capital allowances, always claim them when your asset meets the qualifying criteria.
Claiming capital allowances goes a long way because you can offset capital expenses and enjoy tax relief.
With all these benefits in mind, you can equally set up your business with the qualifying criteria.
Let’s say you have fixed glamping pods; you can tweak your business model to have moveable units over time.
However, the choice depends on the most profitable and convenient option for you. That’s because the running costs differ for moveable and fixed glamping pods.
So, you can stick to operating fixed glamping pods if you incur less running costs compared to having moveable ones.
Regardless, you can, over time, switch to moveable glamping pods if you discover you’ll have higher calculated profits when claiming capital allowances.
Can I Get Any Tax Allowance for My Glamping Pod?
The tax allowance you can get for your glamping pod depends on your setup. Usually, Annual Investment Allowance and Writing Down Allowance are the common types.
That’s because glamping pods can easily fulfill the criteria to qualify for these capital allowances. However, getting the Enhanced Capital Allowance will pose a problem.
In that regard, the Enhanced Capital Allowance only covers eco-friendly machinery. Thus, your glamping pod setup must be 100% eco-friendly.
In most cases, having 100% eco-friendly glamping pods is hard to achieve. So that automatically rules out getting the capital allowance in this case.
However, if your glamping pod is eco-friendly, you can apply for the Enhanced Capital Allowance.
Next, considering the special rate pool, glamping pods already fall in the category of plant and machinery. Thus, they can’t belong to two pools at once.
In that case, you can consider the available capital allowances your glamping pod can qualify for and apply for them.
The Annual Investment Allowance is the most lucrative capital allowance, which offers 100% tax relief. So that’s the preferred option if you meet the criteria.
However, you can equally get a significant tax relief of (18%) for your glamping pod if you meet the conditions for the Writing Down Allowance.
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