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.
- Know it alls (who don't) 47 3
- VAT & Landlords 166 3
- Auto enrolment and husband & Wife companies 399 2
- Extraction of Factory from Trading Company and Leaseback 60 1
- Make an adjustment to profits chargeable to class 4 nic 28 1
- A change from the old Q v NQ debate 493 16
- Share swap 353 11
- Interest Free Loan - Salay Sacrifice? 29 1
- Associated companies - CT small profits relief 236 10
- Cleaners wages at small church -PAYE or self employed ? 313 6
- VAT reports on trade debtors and trade creditors 148 2
- Residential leeting and repairs 81 2
- DOUBLE TAXATION RELIEF BETWEEN A PRIVATE LTD COMPANY AND GREECE (the private Ltd has no employees and its main activity is 229 1
- Entrepreneurs' relief for trustees - receipt of rent 158 4
- Offsetting CIS tax suffered against CT 237 11
- Late P45 83 1
- VAT on motor expenses 938 34
- ideas for a bonus scheme for accountants 518 8
- Why do HMRC have a different FPS liability to the amount I sent? 1,761 23
- another ir35!!!! 1,215 8
- Skandia using wrong address 1,555
- Nil Rate Band Trust - index linked debt by way of charge over property 856
- International interest certificate 474
- NOVA 331
- Subby expenses subject to tax & NI? 242
- Can Limited Company Buy Share of Rental Property? 230
- Management expenses for investment company 221
- Bonus Bonds 212
- Have we escaped Gift with Reservation of Benfit & Pre-owned asset charges? - Gift after benefit 199
- Check my logic on this please? 167