ExpertMedium2 marksMultiple Choice
ACCA · Question 12 · Corporation tax liabilities
Section A
'Sky-High Farms Ltd' constructed a new vertical farming facility. The total cost was £2,000,000, which included £500,000 for the land. The facility was brought into use on 1 July 2023.
What is the Structures and Buildings Allowance (SBA) that can be claimed for the year ended 31 March 2024?
Section A
'Sky-High Farms Ltd' constructed a new vertical farming facility. The total cost was £2,000,000, which included £500,000 for the land. The facility was brought into use on 1 July 2023.
What is the Structures and Buildings Allowance (SBA) that can be claimed for the year ended 31 March 2024?
Answer options:
A.
£45,000
B.
£33,750
C.
£60,000
D.
£45,000
How to approach this question
Deduct the non-qualifying land cost from the total cost. Apply the 3% SBA rate, and pro-rate the allowance from the date the building was brought into use to the end of the accounting period.
Full Answer
B.£33,750✓ Correct
Land is not a qualifying expenditure for SBA. Qualifying cost = £2,000,000 - £500,000 = £1,500,000. The SBA rate is 3% per annum. The building was in use for 9 months of the accounting period (1 July to 31 March). Allowance = £1,500,000 x 3% x 9/12 = £33,750.
Common mistakes
Including the cost of land or forgetting to time-apportion the allowance.
Practice the full ACCA TX — Taxation Practice Exam 3
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