Disability Discrimination Act Compliance – How to Make the Most of Tax Relief

On 1 October 2004 new rules came into force under the Disability Discrimination Act 1995 requiring “service providers” (i.e. any company or organisation which provide goods, facilities or services to the public) to make ”reasonable adjustments” to ensure that disabled people have convenient and dignified access to their premises and services. What is deemed “reasonable” will vary from case to case, as not only on the type of service being provided, but also on the size and resources of the business in question will be taken into consideration. However, service providers are expected to anticipate the difficulties which those with disabilities may experience when visiting their premises, and make any necessary adjustments before the problem actually arises.

No-one would argue that these provisions aren’t long over-due, but many small businesses will be rather alarmed at the expense that compliance with the DDA will potentially incur. Unfortunately, and rather unreasonably, no additional tax reliefs have been made available to ease the burden. However, we can assist you in maximising existing reliefs to ensure that this process is not more costly than it need be.

The tax relief available in respect of business expenses is determined by the nature of the actual expense. Please note that there is a substantial amount of case-law surrounding the tax treatment of business expenditure, and in many respects this remains a “grey area”. However, the following is intended to serve as a guideline for your initial plans / considerations. Revenue expenditure is deducted immediately in full as an expense of the business when calculating the taxable profits. On the other hand, capital expenditure is relieved in one of two ways: equipment installed in the building (e.g. lifts / hoists etc) qualifies for capital allowances and the expenditure is deducted gradually over the life of the asset.

	Revenue Expenditure	Capital Expenditure
What is it?	Generally incurred on an ongoing / recurring basis.	Tends to be of a lump sum or “one-off” nature. Replacement of a whole or substantial part of an asset is generally capital, as is any expenditure which will result in an enduring benefit to the business.
How is tax relief obtained?	Tax relief is given in the form of a deduction from profits in the accounting period in which it is incurred.	Expenditure on “plant and machinery” (e.g. lifts / hoists etc.) is relieved gradually over a period of time, with a % of the expense deducted each year (usually 25%), known as “capital allowances”. A First Year Allowance is available to small and medium enterprises. This is usually 40%, but has been increased to 50% in 2004/05. Costs incurred in altering the fabric of a building do not qualify for CAs, but will be deductible as a capital expense when the property is sold.
What types of DDA compliance expenses fall into this category?	Reprinting documents / signs in large print Minor adjustments to washing facilities (e.g. changing doors so that they open out instead of in) Replacement of existing handrails to ease access Redecoration required due to alterations Replacement door handles Adding coloured markings to ease access to / movement within building Repairs to uneven flooring / paths Repainting doorways, parking bays etc. to make them clearer / wider Removing protruding / overhanging objects	Purchase of & fixing new handrails to ease access Replacement lift New sanitary ware New signs Purchase and installation of moveable, non-permanent ramps Knocking down steps and replacing them with ramps

It is worth noting that any expenditure incurred on replacing assets to ease use by disabled people will generally qualify as revenue expenditure, whereas any new items acquired specifically to comply with the DDA are likely to be capital.

Finally, any alterations to the fabric of a building (e.g. widening doorways / installing a permanent ramp / removing steps or stairs, etc.), though classed as capital expenditure, do not generally qualify for capital allowances. However, if the building is a qualifying industrial or agricultural building, such expenditure may qualify for industrial or agricultural building allowances, whereby an allowance of 4% of the cost of expenditure is tax deductible each year for 25 years.

Should you wish to discuss your general plans or any specific expenses in detail, please do not hesitate to contact me on tel. 01753 888211, email steve@nunn-hayward.com.

Useful links:
Disability Rights Commission www.drc.org.uk/open4all
Inland Revenue guidance notes http://www.inlandrevenue.gov.uk/specialist/disability-act-guidance.htm

STEVE COOK
(Tax Partner)