Capital allowances on CT600

[oversteer]

So I'm attempting this online CT600 all on my ownsome, as profit for the year was a princely £400, including the depreciation on a £590 laptop

As it's the first year there is the slight complication that the accounts cover almost 13 months, leading to two CT600s (12 months and part-of-a-month)

I'm happy to split the turnover/profit across the period based on the fraction of days, but what about the allowances ? Do they split the same way ?

i.e.
£560 profit period 1
£30 profit period 2

£590 laptop purchased on day 1 of period 1
=
I can use £560 of AIA allowance against profit in period 1 meaning I carry forward £30 to period 2 .. meaning no tax ?

I have been going around the HMRC and Business Link sites in a neverending circle trying to work it out !

[Clare@InTouch]

So I'm attempting this online CT600 all on my ownsome, as profit for the year was a princely £400, including the depreciation on a £590 laptop

As it's the first year there is the slight complication that the accounts cover almost 13 months, leading to two CT600s (12 months and part-of-a-month)

I'm happy to split the turnover/profit across the period based on the fraction of days, but what about the allowances ? Do they split the same way ?

i.e.
£560 profit period 1
£30 profit period 2

£590 laptop purchased on day 1 of period 1
=
I can use £560 of AIA allowance against profit in period 1 meaning I carry forward £30 to period 2 .. meaning no tax ?

I have been going around the HMRC and Business Link sites in a neverending circle trying to work it out !

Don't apportion it - allocate the whole AIA against one period.

[Jeremiah@RHJAccountants]

Don't apportion it - allocate the whole AIA against one period.

Agreed WSS

[oversteer]

Agreed WSS

Does that mean I claim the full £590 in period 1 then end up at -£30 which is a loss that's carried forward to period 2 to even out ?

Or only claim £560 (or whatever the profit works out at)

thanks

[Jeremiah@RHJAccountants]

Does that mean I claim the full £590 in period 1 then end up at -£30 which is a loss that's carried forward to period 2 to even out ?

Or only claim £560 (or whatever the profit works out at)

thanks

You need to claim the whole annual investment allowance of £590 in period 1

There will be nothing left after this for period 2 as it will have been all used up

Hope that helps you

[Clare@InTouch]

Does that mean I claim the full £590 in period 1 then end up at -£30 which is a loss that's carried forward to period 2 to even out ?

Or only claim £560 (or whatever the profit works out at)

thanks

Add back your depreciation first:

Profit £400 + Deptn =Taxable profit

AIA reduces that taxable profit to a max of zero. It can't create a loss to carry forward.

Were you trading for the whole 13 months?

[oversteer]

Yes, we were trading. (wish I'd waited 2 days)

Sorry for being thick but if I work it out as £560 in period 1 and £30 in period 2, and then I do AIA of £590 all in period 1, does that not leave me with a minus figure (after allowances) in period 1, and tax on £30 in period 2 ?

(I guess that balances out..)

[Jeremiah@RHJAccountants]

Yes, we were trading. (wish I'd waited 2 days)

Sorry for being thick but if I work it out as £560 in period 1 and £30 in period 2, and then I do AIA of £590 all in period 1, does that not leave me with a minus figure (after allowances) in period 1, and tax on £30 in period 2 ?

(I guess that balances out..)

Basing this on you figures of £400 profit and a depn chg of say £195 which is £590 x 33% less CA of £590 all used in Period 1 leaving you with a total PCTCT of £5

[Clare@InTouch]

Yes, we were trading. (wish I'd waited 2 days)

Sorry for being thick but if I work it out as £560 in period 1 and £30 in period 2, and then I do AIA of £590 all in period 1, does that not leave me with a minus figure (after allowances) in period 1, and tax on £30 in period 2 ?

(I guess that balances out..)

A capital allowance cannot create a loss, the most it can do is reduce your profit to zero.

In year two you will have a general pool brought forward of the remaining balance.