08/09 Capital Allowances

08/09 Capital Allowances

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I act for a sole trader with a 30th April year end.

The capital allowance pool brought forward at 01/05/07 totals just £396 and additions during the year to 30/04/08 (all pre 05/04/08) totalled £505.

I wish to maximise the capital allowance claim for 08/09 and am unsure whether I can claim:

1) 50% FYA on the additions and a WDA on the brought forward pool of £396 at the hybrid rate of 24.66% = 08/09 claim of £350, pool c/f of £551

or

2) b/f pool £396 plus additions £505 = £901 = 08/09 claim as pool value below £1000

I am unsure whether the £1000 pool write is time apportioned as the £50,000 AIA is
and also unsure whether a pool that falls below £1000 in the future will always be eligible for write off, or whether this is a transitional arrangement.

I realise the sums involved are small, but would be very grateful for guidance on this matter.
We are all doomed

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By User deleted
11th Nov 2008 12:19

Small Pool Limit - Post April 2008
My understanding...

The £1,000 WDA ('small pool limit') is only available for accounting periods that START on or after 06/04/2008.

From the question, I don't think the small pool limit is available until the period 01/05/08 - 30/04/09.

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By Colin23
10th Nov 2008 22:35

Small Pool Write off
You are correct in thinking that the £1000 small pool limit is time apportioned. This is intended as a permanent feature not a transistional measure. It is supposedly designed to reduce red-tape. See Budget Note 15.The legislation is contained in CAA 2001 as amended by Finance Act 2008.You do not have to take the full £1000 as a compulsory write off in a full year if it suits you to delay claims.

Legislation :-

CAA 2001 S56A Writing-down allowances for small pools
(1) This section applies in relation to the main pool and the special rate pool.

(2) Where the amount by which AQE ( available (qualifying expenditure) exceeds TDR (total disposal receipts) is less than or equal to the small pool limit, the amount of the writing-down allowance to which a person is entitled for a chargeable period is the amount by which AQE exceeds TDR.

(3) The small pool limit is £1,000, except that—

(a) if the chargeable period is more or less than a year, it is proportionately increased or reduced, and

(b) if the qualifying activity has been carried on for part only of the chargeable period, it is proportionately reduced.

(4) A person claiming a writing-down allowance under this section may require the allowance to be reduced to a specified amount.

(5) The Treasury may by order substitute for the amount for the time being specified in subsection (3) such other amount as it thinks fit.

(6) An order under subsection (5) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.”

(4) In section 59(1) (definition of unrelieved qualifying expenditure)—

(a) after “that period” insert “(a)”, and

(b) after “TDR” insert “, and

(b) where section 56A(2) applies, the person does not claim a writing-down allowance of the amount by which AQE exceeds TDR.”

(5) The amendments made by this section have effect—

(a) for corporation tax purposes, in relation to chargeable periods beginning on or after 1 April 2008, and

(b) for income tax purposes, in relation to chargeable periods beginning on or after 6 April 2008.


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