An amount deducted from an invoice, given to an employee for expenses, or a deduction for tax purposes. Different types of allowances serve various functions in accounting and taxation.
Capital allowances refer to allowances against UK income tax or corporation tax available to businesses, sole traders, partnerships, or limited companies that have capital expenditures on plant and machinery used in the business.
Capital expenditure, often referred to as capital costs or capital investment, pertains to substantial expenses incurred by an organization for purchasing or enhancing fixed assets. These costs are capitalized on the balance sheet and depreciated over the asset's useful life.
Corporation Tax (CT) is a tax charged on the total profits of a company resident in the UK during each accounting period. The rate of corporation tax varies depending on the level of profits of the company.
Deferred taxation refers to the sum set aside for tax in the accounts of an organization that will become payable in a period other than the one under review. It arises due to timing differences between tax rules and accounting conventions.
In tax law, plant and machinery refer to the equipment required to operate a business, qualifying for capital allowances which facilitate tax deductions on business investments in these assets.
A tax allowance is a threshold within the tax code that partially or completely exempts certain amounts of income, spending, or investment from taxation. This allowance can reduce the amount of tax that must be paid.
Written-down value (WDV) is the value of an asset for tax purposes after accounting for reduction in value below the initial cost due to its use in trade. It indicates the remaining value of the asset after appropriate capital allowances.
