Module 3 - Introduction to Capital Allowances Flashcards
What is the first step when calculating capital allowances?
We need to calculate the pro-rated AIA. Multipy the AIA of £1,000,000 by the number of months the accounts have been drawn up for. For example accounts for 4 months means pro-rated AIA is £333,333 (£1,000,000*4/12).
How do you calculate the WDA @ 18%?
Remeber that this scales with the accounting period. If qualifying expenditure is £1,000 over a 4 month period, we need to multiply the £1,000 by 18% and 4/12 to give £60. This is then taken from the £1,000 to give the TWDV c/f of £940.
What is the small pools allowance?
When a business has qualifying expenditure less than £1,000, it may claim an allowance on the value of the qualifying expenditure, writing the pool down to £0. This is pro-rated for long or short accounting periods.
