I have a client who is in his second year of trade.
As we did not claim all of his AIAs last year as they were not needed we have a balance in the brought forward pool of 10k.
One of the items purchased last year has had some enhancement expenditure on it this year (2k) and it was sold in this year for 15k.
Other items have been purchased totalling 50k. (We do not need to claim all as AIA, only circa £30k)
I was wondering 2 things, firstly does the enhancement expenditure qualify for AIA as asset sold in same year?
Secondly, is there a balancing charge in the pool (ie 10k less 15 disposal proceeds) giving a 5k charge and then I will claim the balance of what I need as AIA before transferring remainder into the pool to be carried forward.
Do I simply deduct the disposal proceeds from the Additions qualifying for AIA, give what I need as AIA and trans balance to pool.
The end result is the same, its just what is correct? Method 1 gives an AIA of 30 and a Bal Charge of £5k, whereas Method 2 will just give an AIA of 25
CA23086 seems to suggest Method 1 is correct - however the layout of the software suggests perhaps 2 is correct.