Capital Allowances (1)

Question 1

How are CA generally given?

Answer 1

Against adjusted trading profits in respect of fall in value, due to business use of qualifying assets

Question 2

Is depreciation allowed in adjustment of profits

Answer 2

No

Question 3

How is CA calculated

Answer 3

For periods of account

Question 4

How is CA treated?

Answer 4

As allowable trading expenses in arriving at trading income for period of account

Question 5

How are balancing charges treated?

Answer 5

As trading receipts

Question 6

Who is entitled to capital allowances

Answer 6

Unincorporated businesses (sole traders and partnerships) and companies

Question 7

Where are plant and machinery allowances only available?

Answer 7

For expenditure on plant and machinery which performs a function in trade rather than provide a setting within which trade is carried on

Question 8

Where are capital allowances available?

Answer 8

Cars
Most factory and office machinery and equipment

Question 9

Where is capita allowances not available?

Answer 9

Relieve expenditure on buildings or structures (includes doors, floors and windows)

Question 10

What can qualify as plant and machinery?

Answer 10

Integral features of structures

Question 11

What is put into the maIn pool?

Answer 11

Most expenditure on plant and machinery

Question 12

An addition and a disposal in main pool?

Answer 12

Addition increases pool

Disposal decreases pool

Question 13

Which items are not put in the main pool?

Answer 13

Assets dealt with in special rate pool

Assets with private use by the trader

Short life assets where an election is amde

Question 14

How are writing down allowances (WDA) treated?

Answer 14

Given at a rate of 18% for a 12 month period on TWDV after adding current period’s additions and removing current period’s disposals

Question 15

What is an annual ivnestment allowance

Answer 15

An allowance of 100% is available for first £1m of expenditure on plant and machinery for a 12-month period of account

Question 16

AIA purchase of cars?

Answer 16

Non-existent

Question 17

How should AIA be first allocated?

Answer 17

To additions qualifying for WDA at lower rate

Question 18

When the balance of unrelieved expenditure after additions and disposals on the main pool is £1000 or less?

Answer 18

Balance can be claimed as WDA leaving the relevant pool with a nil balance

Question 19

Which of the following are pro-rated?

Answer 19

WDA
AIA limit of £1 million
Small pool threshold of £100

Question 20

An accounting period length?

Answer 20

Can never be longer than 12 months for tax purposes