Its late and I just need a second opinion on this (what used to be simple) question.
A sole trader client has losses brought forward of around £7,000 and then makes a small profit before capital allowances of £1,000. He has a capital allowance pool brought forward of around £24,000 of which he could claim capital allowances of £4,800 this year.
Am I correct in thinking that if I disallow all the capital allowances then £1,000 of the loss will automatically utilised, otherwise I could use the capital allowances to wipe out the profit and therefore retain the loss. Either way what was covered by personal allowances anyway will be wasted.
Seeing as either losses or capital allowances will be wasted, is the best option to claim all the capital allowances available (£4,800) to increase the loss to carry forward so that a larger loss will be available to offset against next year plus further capital allowances for that year.
Higher profits are expected next year but what if £7,000 profits are made before capital allowances, then even higher losses will be wasted.
That being the case should I just use £1,000 of the losses and disallow the capital allowances this year to retain them to be used when most beneficial rather than converting them to losses and having to use them against the first available losses?
EDIT: I guess the answer is ... it depends what the future profits will be.
- Now Scotland has voted "No", when does England get to vote? 583 17
- Personal allowance for a resident of both Belgium and UK? 180 10
- Expenses prior to Startup date for startup 40 1
- VAT registration for self employed dentist??? 528 19
- Warning of enforcement action - without any warnings 155 2
- How can customer service quality vary between the basic pension firms? 198 3
- What is the role of an accountant? 1,215 21
- How to pursue fraudulent trading 94 2
- business card address 992 11
- VAT on educational consultancy 74 1
- Which tax box 53 1
- Will this AIA be disallowed when asset transferred to Ltd Co 163 10
- Tax on private fuel for own car 83 1
- About to buy a block of fees. Any advice? 1,596 8
- paragraph 2 schedule 36 finance act 2008 78 1
- would home tutoring ever have to come under PAYE? 138 5
- Supplier invoice addressed to a different company, how is this treated for VAT? 218 10
- Moneysoft payroll 308 17
- Sportman claiming for training kit 844 9
- Self Employed Hairdressers and VAT treatment 131 2
- Raiders of the Lost Tax File 1,252
- Chartered Accountant in County Down N.Ireland 448
- National Insurance 347
- Unnecessary S9A Enquiries 269
- Non Resident 265
- Cass 5 FCA Client Money Software recomendation 257
- Franchise income and costs 230
- Hands on experience of Digita 180
- Tax on interest received from insurance company 170
- Employer's Helpline 136