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.
- Filing Dormant LLPs with Companies House 116 2
- monthly payments 20 1
- Fixed Assets 290 6
- Tick & Bash Bristol 347 6
- Preference shares redeemed at less than par 243 12
- Client Death 217 2
- Coding notices post P11d 1,848 12
- Tax position re this lease? 190 3
- Normal trading company or property management company for CT600? 142 1
- What are options for non CA firm 1,689 26
- Do I need to pay Capital Gain Tax 576 24
- Real names 1,178 35
- Hive up - accounting and notes to financial statements 91 1
- What do "Former Contracted Out" rebates mean 157 2
- Director salary from company limited by guarantee 264 8
- Dividends with an annual profit but retained losses 192 1
- Anyone come across this shower before? 1,947 35
- What are the tax implications of employer paying my tuition fees? 226 1
- Company Secretarial Software 1,391 30
- Do I need to report this to SOCA 721 9
- Proposed Amendments to IAS 1 586
- Property exchange - 8-year legal delay following fall-out 456
- Accounting for Insurance Premium Financing 355
- IFA incorporation 340
- Sorry ignore me 329
- Moving into own BTL property - allowable costs 282
- Will Ni be payable on the salary I receive abroad ? 277
- SAGE Payroll Data for Import to MS Dynamics AX 265
- Cancelled 209
- property ownership between husband wife three taxpayers 179