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.
- Scientist switch to accountancy - work experience? 1,173 30
- Treatment of private ambulances on introduction to business 135 4
- New Company reviews please 623 16
- Is there no lower level to the work a lawyer would take on. 1,072 33
- Business only use of company car 744 27
- Voluntary Disclosure 391 8
- Gift to son by parents 157 1
- valuation of vehicles 490 19
- How to revise RTI for Moneysoft 285 4
- Director Salaries - Sole Director Limited Company who is also employed elsewhere 173 1
- Ethical Issues / Conflict of Interest 403 3
- Mortgage Interest - Tax Deductible 462 4
- BTC is slow 308 3
- Director registration for SA question 531 17
- Issues with freelancer taking zero salary from limited company 467 6
- Tax on LLP members drawings not covered by future profits 518 22
- Dormant company late with their CH submission 526 14
- Penalties for late PAYE scheme 365 4
- How do you pay Inheritance Tax when HMRC haven't demanded it 355 4
- VAT with Russia 284 2
- RTI Rollback to delete incorrect data 320
- Any thoughts on Capium? 259
- Vouchedfor.co.uk 258
- Motor Traders Assistant Bookkeeping Programme queries 248
- Tracesmart/Lexis Nexis AML software? Any opinions? 227
- auto enrolment 200
- Sage Compatible P60's Self Seal 186
- Continuity of practice-ACCA 172
- How to account for investment in JV? 165
- Recommended International mobile phone coverage and costs? 158