2.3 Calculation of AIA

Question 1

For what period can a claimant claim AIA?

Answer 1

Only in chargeable period in which the expenditure was made?

Question 2

If expenditure is more than the full allowance what also can be done?

Answer 2

Balance available for FYA and WDA in the period in which expenditure is incurred.

Question 3

What are the relevant chargeable periods for IT and CT

Answer 3

IT 18 months and CT 12 months

Question 4

If company’s AP = 9 months and allowance is £250k what is maximum allowance?

Answer 4

9/12 x £250k = £187.5K

Question 5

If ST chargeable period is 15 months to 31/03/15 (£250k up to 06/04/14 and £500k after) what is maximum allowance?

Answer 5

3/12 X £250k = £62.5k + 12/12 x £500k = £500k = £562,5k

Question 6

What are the two parts of the transitional rules

Answer 6

1st calculate maximum AIA adding elements before and after change; apply secondary restriction depending on whether allowance has increased or decreased.

Question 7

In applying the secondary restriction what is the cardinal rule?

Answer 7

Always apply to the part of chargeable period which has the lower maximum amount.

Question 8

Which part of the chargeable period would the restriction be applied to if the allowance increases?

Answer 8

First part before the change.

Question 9

Which part of the chargeable period would the restriction be applied to if the allowance decreases?

Answer 9

Second part after the change

Question 10

Where the change is an increase AIA expenditure incurred before the change is restricted to?

Answer 10

N/12 x old maximum amount (where N = number of months in chargeable period)

Question 11

Where the change is a decrease in AIA expenditure incurred after the change is restricted to?

Answer 11

B/12 x new maximum amount (where B = number of months in chargeable period after the change.