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.
- Tax refunds for 2014/15 1,134 21
- Overseas business trip - accompanied by family 41 1
- Spousal transfer and PPR 689 30
- unmarried couple, two houses, one rental - CGT? 241 8
- recompense capital input 178 11
- Exports/Dispatches - non VAT registered 102 2
- Capital allowances on taxis 219 2
- CT losses carry back 81 1
- Thoughts on revenue recognition 544 17
- help guys! self employed or still company income? 142 2
- Do I have grounds to dispute our accountant’s fees? 753 19
- Deferred Tax Asset & Liability 414 12
- Where has Portia gone? 2,263 68
- Financial Advisor / Mortgage brokering 129 1
- Associated disposals - Entrepreneur's relief 183 3
- Are Sales to Germany considered VAT Taxable turnover for HMRC? 222 5
- New Client wants an Income Certificate for a Mortgage 989 22
- What shall I reduce payments on account to? 201 3
- transferring from franchisee to ltd comapny 253 5
- Merging my businesses 230 3
- Services via intermediaries and new HMRC reporting requirements 797
- RTI - duplicate employee record 562
- Pensions Regulator 451
- How hard is it to reduce a code? 413
- Portia ... Where art thou 328
- Sanzar 315
- How do you do it 300
- Digital marketing focus group 298
- Kashflow balance sheet difference 273
- new investor structure 183