Capital Allowances

[HandySparks]

I'm a sole trader. I've bought a new van outright in this tax year, for business use only. My accounting year is the same as the tax year. It cost £20,000 (not exactly, but it keeps the sums easier). As I understand it, I could apply the whole amount against my profits for this tax year as it's less than the current Annual Investment Allowance (AIA). However, this would bring my taxable income to below the Income Tax Personal Allowance, which would waste part of the capital allowance. I also have other reasons to want to spread the capital allowance claim. I think that I can claim part of the cost of the van in this tax year and the remainder in one or more following years. For example, £5000 for each of the next four years or £10,000 this year and £5000 for two following years. Is this correct? Do I have this choice and flexibility?

If I choose not to claim the full amount in the first year, do the rules for Writing-Down Allowances (WDA) apply? I think not, as I have chosen to delay claiming part of the allowance (rather than being forced to because of exceeding the AIA), although the WDA guidance refers to "residual balances of expenditure".

I refer to this page on the HMRC website:

HM Revenue & Customs: Capital allowances: the basics

In the section "Claiming capital allowances":

"You can choose not to claim an allowance, or not to claim the full amount. If you claim only part of what you're entitled to you can in most cases carry the balance of unrelieved expenditure forward and, you may be able to claim an allowance on it in a future accounting period."

Anyone know for sure?


Also, for reference:

HM Revenue & Customs: Capital allowances on plant and machinery

"Writing-down allowances (WDA)

WDA are annual allowances that reduce, or 'write down' any balance of capital expenditure on plant and machinery that you haven't been able to claim either the annual investment allowance or a first-year allowance for, and on residual balances of expenditure that you have carried forward from the previous accounting period."

 

[Plonker 3]

Ask your accountant.

 

[Octopus]

My "understanding" is that you take a consistent percentage so:

year 1 - £20K minus 20% (being your capital claim)
Year 2 - £16K minus 20%
Year 3 - £12800 minus 20%

But I could be wrong!

I was hoping to get this last night, as you saw, but the OP in question simply wanted answers from us without giving anything in return!

 

[TerryCTR]

Murdoch now that is bull, I told you I would PM you after work to assist even after you called me a twxt and questioned how I could decide after reading reviews when I don't know anything about being a spark. Does the same count here if I give you some options, your no accountant so how can you make a decision (or your mate).

I also said yes I can give 5 mins advice FOC. This is not 5 mins advice as I need a lot more detail in order to give actual outcomes. So I have to do all this so in your eyes you can justify saying to me I recommend x brand :/

handysparks- I'll need to boot my computer up as the phone is too small to digest what you have written and I'll probably need some info from you. If you are ok with that then I will give my opinion (and yes Murdoch I am qualified and know all the latest rules)

 

[Octopus]

Murdoch now that is bull, I told you I would PM you after work to assist even after you called me a twxt and questioned how I could decide after reading reviews when I don't know anything about being a spark. Does the same count here if I give you some options, your no accountant so how can you make a decision (or your mate).

I also said yes I can give 5 mins advice FOC. This is not 5 mins advice as I need a lot more detail in order to give actual outcomes. So I have to do all this so in your eyes you can justify saying to me I recommend x brand :/

handysparks- I'll need to boot my computer up as the phone is too small to digest what you have written and I'll probably need some info from you. If you are ok with that then I will give my opinion (and yes Murdoch I am qualified and know all the latest rules)

Which just goes to show how a little information in "unskilled" hands can be dangerous.

 

[dingledong]

You have to give it to him he has come back on and is willing to answer some few questions

 

[TerryCTR]

God almighty on an on Murdoch you go.

you tell me I think Xxxxx is a good brand so I go buy that for my dad (retired spark) to fit. Where the hell is the danger in that unless your recommendations are poor?

 

[Octopus]

God almighty on an on Murdoch you go.

you tell me I think Xxxxx is a good brand so I go buy that for my dad (retired spark) to fit. Where the hell is the danger in that unless your recommendations are poor?

I thought this thread was about capital allowances.

You have openly criticised me yet you offer no advice.....on this thread.

 

[TerryCTR]

Murdoch you are right, this thread is being taken off on a tangent much like the one last night, apologies to the OP.

Handysparks now PM'd when you get a moment please respond with the required info

Terry

Edit: I've given you what you need to know without having to go into detail so you can ignore the first PM.