Share this content

Does new trader get double AIA?

Does new trader get double AIA?

I am unclear as to how much AIA this new trader is entitled to for the one month's trading falling into 10/11...

May - Aug 2008: pretrading capital expenditure of £1,305. (AIA maximum £50k for 08/09 applies to this expenditure)

There was a delay in being able to start the business, and the unused equipment was brought into use on 1/3/11.

A van was purchased at the beginning of March 2011 for £12,592. (AIA maximum £100k for 10/11 applies to this expenditure)

Is he allowed a twelfth of 50k, a twelfth of 100k, or some combination of the two?

What a nightmare CAs have become!


Please login or register to join the discussion.

21st Jul 2011 14:08

Two aspects
Pre-trading expenditure is deemed to have been incurred on the first day of trading.  If that was 01/03/11, the £1,305 falls into 2010/11, along with the £12,592.The AIA is reduced in proportion to the accounting period.  If that was 1 month in 2010/11, the maximum AIA available on the capital expenditure of £13,897 would be £8,333.

Thanks (0)
22nd Jul 2011 10:05


Euan, are you sure? I've spent a while looking at related queries on Any Answers, also some of the CA manual. For FYA and AIA the 'first day of trading' rule is set aside, and entitlement is based on the actual purchase date.

As a different AIA maximum applied in the purchase year from the commencement year, what is to be done?

Thanks (0)
22nd Jul 2011 10:57

That's not quite right

S.12 CAA 2001 says that expenditure incurred before the qualifying activity is carried on is treated as incurred on the first day that the qualifying activity is carried on.

S.38A then sets out what is AIA qualifying expenditure and says that S.12 is to be disregarded, such that for AIA purposes, your expenditure is still incurred when it was actually incurred.

S.51A then deals with the entitlement to AIA and says that the expenditure must have been incurred in a chargeable period for AIA to be due.  Since your £1,305 was not incurred in a chargeable period, there's no AIA for it.

You still only get £8,333 in respect of the £12,592 actually incurred in 2010/11.

For the purposes of inclusion in your pool, your £1,305 is still treated as incurred on day 1.

Thanks (0)
22nd Jul 2011 11:02


I see (I think!). God knows how anyone doing their own tax return is supposed to understand any of this.

Thank you both for your responses.


Thanks (0)
By GWhaley
01st Aug 2011 14:47

AIA allowances

Not quite sure how the £8,333 is arrived at. Can any one enlighten me please?

Thanks (0)
By mwngiol
01st Aug 2011 15:15


One twelfth of the maximum AIA available for the period

Thanks (0)
Share this content