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AIA and Capital Allowances

  • Associate PM.Dip
  • Practice Licence
  • 30 posts
  • # 101611

 

Good morning.

I have a client who is a farmer and had a large tax bill last year, He has made a purchase of a new tractor this year and has asked if it is possible to carry back AIA and Capital allowances so he can get some of this tax refunded.

In the past he has used farmers averaging.

Any information on this subject would be greatfully received.

 Thank you

Rachel.


  

 

  • 356 posts
  • # 101628

I don't think you can carry it back but if it is sufficient to put him into a loss then that loss can be used against previous years profit as far as I know and generate some tax back from that 

  • Associate PM.Dip
  • Practice Licence
  • 30 posts
  • # 101648

Thank you very much for the info Sharon.

 

rachelLaughing

  • Member
  • 23 posts
  • # 109397

Hello ladies,

I have just found this thread. I know it is old but I would appreciate some help. 

I am currently working on my husband's self-assessment for the first year of trading and I am struggling with recording a van purchase. I should add that the van was paid for in full at the time of purchase, it is a second hand van and he bought it 2 months before he registered as self-employed.

My questions are these:

1. Do I record the purchase under capital allowance and can I claim 100% of the cost?

2. Is it allowed to claim for a capital purchase before starting trading?

 

Any comments will be greatly appreciated!!!

 

 

All the best,

 

AlexSmile

  • 1159 posts
  • # 109406

If the van was not used until the business was established, and was a genuine pre trading asset purchase then full AIA can be claimed.  Sometimes in new businesses it's more advantageous to claim WDA or defer a claim depending on the profit levels.  You wouldn't want to lose your personal allowance.

Kris

  • Member
  • 23 posts
  • # 109408

Hello Kris,

Thank you so much for your post. The van was used from the time of the purchase for business only. He has made a loss during that year even before the purchase of the van was taken into account. Could I possibly defer claiming for the van until the next year? 

 

Thanks,

Alex



Edited at 05 Jul 2015 10:31 PM GMT

  • 1159 posts
  • # 109411

Sure, you can't claim AIA in year 2 but you can defer the writing down allowance.  When you calculate WDA (at 18% for vans) that shows the maximum you can claim.  You don't need to claim the whole amount, or any.  You can't carry forward one years claim to the next though.

Kris

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