Sole trader capital allowances and tax credits

Sole trader capital allowances and tax credits

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Does anyone know if there is a rule for tax credit purposes that an individual must claim all capital allowance available when they are a sole trader and claiming tax credits (client claims the disability element)

They have been advised by the tax credit helpline they must claim the capital allowances in full (AID/WDA) if they are claiming tax credits.

I know there are the deprivation of income rules so i could only guess tthat if you didn't claim the allowances one year - you would then be choosing to have lower icnome next year by making that decision. That does seem a bit ott though?

Thanks in advance.

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RLI
By lionofludesch
26th Jul 2019 10:57

Makes no sense at all. They claim this year or they claim another year. In the long run, it makes no odds.

Ask them for their reference in the regulations.

HMRC helplines are often wrong. Or maybe the client has misunderstood the advice he was given.

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By Accountant A
26th Jul 2019 11:12

I am struggling to believe that anyone on an HMRC helpline would understand the subtleties of not fully claiming CAs.

The HMRC Tax Credit manuals are online so have you tried looking there?

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