Module 4

Question 1

Aim of capital allowances is to?

Answer 1

Deduct for the net cost of a qualifying asset

Question 2

Plant and machinery does not include?

Answer 2

Expenditure on a building

Walls floors Ceilings and doors
Performs and function = trade

Expenditure on a structure

Question 3

Allowances can also be claimed on (plant and machinery)

Answer 3

Alteration of building to install
Demolition costs
Thermal insulation

Question 4

If the obligation to pay becomes unconditional within one month of end of chargeable period,

Answer 4

Deemed to have incurred within it

Question 5

Hire purchase

Answer 5

Capital allowance on cash cost on day 1

Question 6

TWDV

Answer 6

Starting expenditure

B/F

Question 7

Cars don’t qualify for

Answer 7

AIA

Question 8

Each disposals is recorded at the

Answer 8

Lower of cost or proceeds

Question 9

Writing down allowance - length of period

Answer 9

% x (n/12) x qualifying expenditure

N= months in period

Question 10

Qualifying expenditure (B/F + additions - disposals) of less than £1000

Answer 10

Claim any allowance up to value of qualifying expenditure, writing pool to 0

Question 11

How is qualifying expenditure calculated?

Answer 11

Brought forward + additions - disposals

Question 12

Better to use AIA on

Answer 12

Special rate items

Question 13

AIA Provides full twx relied on?

Answer 13

Plant and machinery other than cars to all businesses

Question 14

AIA is annual so should be

Answer 14

Scaled up or down for different accounting periods

Question 15

AIA before jam

Answer 15

Months before jan x 200000/ 12 + m from jan x 1000000/12

Question 16

First year allowances

Answer 16

Given on things kinder to environment

Without limit

Question 17

Special rate pool

Answer 17

Long life assets -25years + only if more than £100,000 (scaled up or down)
Integral features - electrics, water, heat, lifts,
High co2 emission cars

Question 18

Balancing allowances are

Answer 18

Sell < TWDV (extra tax relief)

Question 19

Balancing charges when?

Answer 19

Sell > TWDV

Too much tax relief - give some back via a balancing charge

Question 20

Dixon vs Fitch’s garage?

Answer 20

Canopy over a petrol station not qualifying as had no function and instead formed pay of the setting

Question 21

Not premises
Used in business
Working capital

Answer 21

Plant

Question 22

As well as on purchases of plant and Machinery, capital allowances can be claimed on?

Answer 22

Alteration to install plant and machinery
Demolition costs
Thermal insulation

Question 23

The effective date on which expenditure is incurred is when?

Answer 23

The date on which the obligation to pay that amount becomes unconditional

Issue of certificate- unconditional within one month of end of chargeable period

Question 24

What is the TWDV?

Answer 24

Tax written down value

Expenditure which has not yet received tax received - brought forward at start

Question 25

Writing down allowance?

Answer 25

Annual allowance given to a trader / company in respect of qualifying expenditure

Question 26

Disposal recorded at?

Answer 26

Lower of cost or proceeds

Question 27

Allowances grantees when?

Answer 27

After additions and disposals have been accounted for