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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."
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."
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