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.
- First director's salary payment 3 months after ltd company formation 474 7
- Identify cost savings 126 3
- Companies Made Simple - I guess they don't want our business any more 338 5
- Seeking advice: Director's claim to money 71 2
- Just another average day trying to deal with HMRC 1,595 19
- Member meet up 1 October in London 262 7
- Laptop help needed I bought the wrong operating system 534 11
- Only pref shares. Does it matter 165 5
- Chart of account segments; Balance sheet vs P&L 816 1
- Fees 759 8
- P11D & tax return 265 10
- Freelance/Employee 912 22
- VAT on children's clothing 159 4
- when is a bad debt a bad debt 239 6
- Why do I get the feeling ... 442 5
- Accounting Web - What is happening? 2,444 50
- Concurrent users 458 7
- SEIS: is it ok for co to spend money before the shares are issued? 99 1
- ACCA Special Business Resolutions... 474 8
- Creation of leases out of freehold 167 2
- Any knowledge of salesorder.com 437
- Could and would anyone here carry out a hot file review of some non statutory audit work please? 389
- Electric Car 328
- S222 Charge 266
- Corporation tax penalties and fines on the CT600 236
- AIA 212
- IP trans to holding company 209
- Best way to convert Sage data to VT Transaction+ 200
- Car used both in a partnership and sole trader business - how to claim capital allowances? 165
- Career advice needed regarding accouting systems analysis 157