A Basic Guide to Tax Deduction & Playground Shelters

If you’re considering installing shelters and canopies for the playground, cost becomes an important consideration for most schools. By looking into the effect the cost may have on tax, you can begin to seriously consider your decision on installing shelters and canopies. The cost outlay of purchasing a school shelter or Canopy may counteract against your yearly tax return and possibly against VAT as well.

Your Tax Return

The purchase of playground shelters and canopies will be treated the same as any other expenses on the yearly tax return and all costs that sustain the stability of a club or organisation can be deducted from the total taxable income each year.

School canopies and shelters are however, treated differently as they are in hindsight, a permanent structure. This means that purchases that have the intention of lasting a long time, cannot offset over the first year, alternatively they must be offset against tax, over a longer period of time of three years, to justify its longevity against purchases such as classroom supplies or school trips which are looked upon as short term purchase.

This procedure is achieved by spreading the expense equally over the three years. A third of that cost from installing school shelters and canopies can be offset against the taxable income of the first year. This measure is then repeated in the second year and in the final third year, the tax becomes a deductible expense.

Reclaiming VAT

There may be an opportunity to reclaim VAT on the cost of installing a school Canopy or shelter. If the school’s governing body are accountable for purchasing the product they cannot reclaim any VAT, however if the Local Authority (LA) are responsible for the purchase, it is likely that VAT can be reclaimed.

School can however turn to grants that are available to assist in improving their premises. Some may refer to the installation of playground shelters and Shades and in such conditions there may be an opportunity to reclaim VAT, as long as certain criteria are met.

If you’re school is funded by a grant, then any installation has qualify as capital expenditure rather than revenue. If small repairs or improvements have to be taken out, these purchases will be classed as revenue and you will not be able to qualify for the VAT to be reclaimed.

DfE-granted funding of VAT-inclusive costs will not be eligible for VAT reclamation. However, if the funding provided isn’t spent to cover all of the costs, it’s possible that you can reclaim VAT on the remaining portion of expenditure.