“Why does the CT programme apparently allow me to claim more than the restricted amount in AIA’s? From the AIA detailed information period 01/04/2012 – 31/12/2012 the amount I should be able to claim in AIAs is £18,750 however the programme allows £22897.71 to be claimed.”
We have had this question once this week and at least twice in the past month.
As luck would have it HMRCs example has exactly the same AP!
Period 2 AIA allowable is greater than the £18750 actual basic apportionment as indicated below:
Example
A company with a transitional chargeable period from 1 March 2012 to 28 February 2013 would calculate its maximum AIA entitlement based on:
(a) the proportion of a year from 1 March 2012 to 31 March 2012, that is, 1/12 x £100,000 = £8,333; and,
(b) the proportion of a year from 1 April 2012 to 31 December 2012, that is, 9/12 x £25,000 = £18,750; and ,
(c) the portion of a year from 1 January 2013 to 28 February 2013, that is 2/12 x £250,000 = £41,667.
The company’s maximum AIA for this transitional chargeable period would therefore be the total of (a) + (b) + (c ) = £8,333 + £18750 + £41,667 = £68,750, although in relation to part (b) (the part period falling on or after 1 April 2012 and before 1 January 2013) no more than a maximum of £22,917 (that is, 11/12ths x £25,000) of the company's actual expenditure in that particular part period would be covered by the company's maximum AIA entitlement. (The restriction to £22,917 is a consequence of the transitional rules applying to the reduction from £100,000 to £25,000.)
You know it makes sense….hands up all those who understand this… :)
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AIAs
As usual, the Government didn't really think this out in terms of the confusion it would cause to both taxpayers and tax practitioners.
I attended a lecture by Rebecca Benneyworth in September run by CIOT/ATT East Midlands in September and even she had to admit its complexity. However, she has kindly imparted her understanding of the AIA limits etc to us! I do sort of understand it, but will have to refer to Rebecca's notes when checking the software calculations.
How on earth anyone without fairly extensive tax knowledge would have a hope of comprehending these limits is beyond me. It will be interesting to see how many people get it wrong, and at what cost to some businesses.
I understand it.
I understand it but I only managed to do so by abandoning all logic and reason. This is much like the government who changed the AIA from £100k to £25k and back up to £250k.