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AIA and interaction with disposal

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.



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By pawncob
29th Mar 2012 21:46

the old way is often the best

Before AIAs, you would always calculate the balancing charge on the disposal and show it separately in the claim because there could be a restriction applicable  to it which wouldn't show up if you just used the net figures. Presumably the same rules apply now.

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