Disability Discrimination Act - new access requirements - tax guidance

Contents

Introduction

From 1 October 2004, the Disability Discrimination Act (DDA) requires service providers to make 'reasonable adjustments' to their premises to tackle any physical features that prevent disabled people from using their services.

What is reasonable will vary in different situations. It may depend on the type of service being provided and the size and resources of the service provider. It could be as simple as using contrasting colours to help visually impaired people distinguish walls from doors, lowering a counter to make it more accessible to a wheelchair user or providing better lighting and clearer signs. If you would like more information about the new duties you can visit the Disability Rights Commission’s (DRC) website or you can contact the DRC helpline by voice, text, fax, post or email. You can speak to an operator at any time between 8.00 am and 8.00 pm, Monday to Friday:

Telephone: 08457 622 633
Textphone: 08457 622 644
Fax: 08457 778 878
Email: enquiry@drc-gb.org

If you would like more information on disability issues, please visit the Directgov website.

Part 1 Overview of the tax relief already available

Many of the adjustments potentially needed in relation to new duties under the DDA will already qualify for tax relief, either as a revenue expense, or through capital allowances. Follow this link for more information.

Revenue expense

Examples of revenue expense include the cost of large print documents, staff time and training on disability issues. These are fully deductible for tax purposes.

Capital allowances

Plant and Machinery Allowances (PMAs)

PMAs allow the cost of expenditure on certain capital assets to be written off against a business's taxable profits. They take the place of depreciation charged in the commercial accounts. Commercial depreciation is not allowed for tax.

The cost of items such as hoists, lifts or evac chairs qualifies for PMAs. Similarly, toilets and basins, including those specially designed for use by disabled people, qualify for PMAs.

From 1 April 2008 the main rates of PMAs for expenditure on qualifying plant and machinery are:

  • 20 per cent a year on a reducing balance basis for general spending on qualifying plant and machinery
  • 10 per cent a year on a reducing balance basis for qualifying plant and machinery with a useful economic life, when new, of more than 25 years, or integral features, see below

From 1 April 2008 a new Annual Investment Allowance has been introduced for the first £50,000 of expenditure on qualifying plant and machinery (other than cars) in a particular year. It provides a 100 per cent allowance for the first £50,000 of investment on qualifying plant and machinery (other than motor cars) in a year to all businesses regardless of size. It replaces the existing 40 or 50 per cent first-year allowances for investments in plant or machinery by small or medium-sized enterprises.

The existing 100 per cent Enhanced Capital Allowances (ECA) schemes for environmentally beneficial plant and machinery, or other plant and machinery allowances schemes offering 100 per cent first year allowances remain available. Guidance is available in the Capital allowances manual.

Integral features, long life assets and thermal insulation

From 1 April 2008 expenditure on the provision or replacement of a qualifying integral feature will now qualify for a writing down allowance of 10 per cent per annum. The list of qualifying integral features is as follows:

  • electrical systems (including lighting systems)
  • cold water systems
  • space or water heating systems, powered systems of ventilation, air cooling or air purification, and any floor or ceiling comprised in such systems
  • lifts, escalators and moving walkways
  • external solar shading

Expenditure on long life assets and on adding thermal insulation to existing buildings also qualifies for the 10 per cent writing down allowance.

Guidance is available in the Capital allowances manual.

Alterations to the fabric of buildings

Expenditure on structural alterations to a building does not qualify for any capital allowances, unless the building is an industrial or agricultural building or qualifying hotel. In those cases, the expenditure may qualify under the Industrial Building Allowance (IBA) code or the Agricultural Building Allowance (ABA) code. Examples of such structural works are installation of a permanent access ramp or the enlargement of a doorway to facilitate wheelchair access.

Expenditure may also be also incurred on making alterations to an existing building when installing qualifying plant or machinery, such as an air conditioning unit. However, such expenditure only qualifies for capital allowances if there is a direct link between the incurring of the expenditure on the alterations and the plant or machinery said to have given rise to that expenditure.

IBAs or ABAs

From 2008-09 writing-down allowances on industrial buildings, qualifying hotels, and agricultural buildings will be gradually phased out. Effectively, the allowances are:

2007/08 - 4%
2008/09 - 3%
2009/10 - 2%
2010/11 - 1%
Thereafter - nil

More information about the changes can be found in the Capital Allowances manual.

Part 2: Examples of the tax treatment of particular types of expenditure on

Ramps

Expenditure on building or installing a permanent ramp to facilitate access by members of the public qualifies only if the work is carried out to an industrial or agricultural building or 'qualifying hotel'. Relief is given for the expenditure under the IBA code or agricultural buildings allowance ABA code.

Businesses that buy moveable ramps that are not permanently fixed to the building are able to claim PMAs on the cost of the ramp.

Toilets and washing facilities

Minor adjustments, such as changing doors on cubicles from opening inwards to opening outwards, would normally be wholly deductible for tax purposes as revenue expenditure.

The costs of making building alterations to toilets (for example, to widen a doorway to facilitate wheelchair access) are not allowable for tax purposes, unless the building is an industrial or agricultural building or qualifying hotel. In those circumstances, the alteration costs qualify for IBA or ABA capital allowances.

The cost of new sanitary ware installed to comply with DDA requirements qualifies for PMAs. So do the costs of installing the sanitary ware.

Signs

The costs of permanent signage qualify for PMAs.

Expenditure on, say, affixing warning transparencies on glass doors or similar surfaces qualifies for relief as a revenue expense. The use of coloured paint to make things easier to see (by, for instance, painting doors, step edges, or passages in contrasting colours) is allowable in full for tax purposes.

Hand rails

Where businesses replace existing handrails with special handrails to ease access for disabled people, the expenditure would normally be accepted as a repair and would be deductible in full.

Where new handrails are installed for the specific purpose of helping customers with mobility impairments, the cost would constitute capital expenditure but would qualify for PMAs.

Lighting and electrical systems

From 1 April 2008 new expenditure on lighting and electrical systems qualifies for a 10 per cent writing down allowance per annum as integral features. Electrical systems do not include computer, telecommunication, and surveillance systems (including their wiring), nor fire alarm or burglar alarm systems.

If the lighting appears on the Energy Technology Criteria List 100 per cent first-year allowances can be claimed. More guidance can be found in the Capital allowances manual.

Internal and external doors

Usually, doors are considered to be part of the premises and do not qualify for capital allowances. As such, no allowances are due on installing new doors.

But where a door is no longer fit for use, it is likely that the cost of replacing it would qualify for relief as a repair, and so is wholly deductible as a revenue expense.

Quite often simply replacing a traditional door handle with a D-shaped or similar handle enables service providers to provide improved access.

A door handle would normally be an integral part of the door to which it is affixed, with the result that it would not qualify for PMAs. Any replacement of the door handle, however, counts as a repair, and so is allowable as a revenue expense. Some mechanical door handles may not qualify as a repair, where they are actually an improvement over the previous handle, but they could qualify for PMAs as machinery.

Lifts

Where expenditure is incurred on constructing a new commercial building the cost of constructing the lift shaft is not allowable.

However, the cost of installing a lift or replacing an existing lift with a modern lift is considered to be expenditure on an integral feature and qualifies for a 10 per cent writing down allowance per annum. In addition, if incidental to the cost of installing the lift machinery, the costs of installing the lift shaft will also qualify for PMAs. More guidance can be found in the capital allowances manual.

Steps and stairs

Expenditure on knocking down steps and replacing them with ramps is not allowable. However, expenditure on adding fluorescent and coloured strips to the edges of steps, approaching and within business premises, to assist access by visually impaired people, is allowed as revenue expenditure on repairs and maintenance.

Alterations to walls and floors

Alterations to the fabric of a building are not normally allowable for tax purposes, unless the building is an industrial or agricultural building or qualifying hotel or unless the alterations are incidental to the installation of plant or machinery. So any expenditure on making new doorways or widening existing doorways would not normally qualify for relief.

However, repairs to floors, for example, to level out uneven surfacing due to wear and tear over time, is allowable as a revenue expense.

Also, HM Revenue & Customs (HMRC) accept that painting walls or floors in bright contrasting colours, to assist access by visually impaired people, is allowable as revenue expenditure on repairs and maintenance.

Car parks

HMRC accept that expenditure on, for example, redefining parking areas by repainting parking bays to provide wider, designated bays for disabled parking, is a revenue expense, which is allowable in full for tax purposes.

Where the work is more substantial, for example, to include car park resurfacing, then as long as there is no improvement element, the expenditure is allowable as normal revenue expenditure on repairs.

Paths

Normally expenditure on paths or land does not qualify for capital allowances. However there is a distinction between improving and repairing property. While expenditure on improvements generally counts as capital expenditure (which does not normally qualify for allowances) expenditure on repairs is a revenue expense, which is allowable in full for tax purposes.

Thus, where a business incurs expenditure on its paths in order to remove obstacles that could present a danger to the disabled, for example on:

  • replacing cracked or uneven paving slabs
  • cutting back protruding or overhanging objects, grass or other vegetation

the expenditure is revenue expenditure and is allowable in full.