Trading profits and Capital Allowances

Question 1

16 examples of disallowable income

Answer 1

• Loss on disposal of NCA
• Depreciation
• Capital expenditure
• Private element of expenditure by owner
• Unreasonable payments to family members
• Increase in general provision
• Write-off of non-trade debt
• Client entertaining
• Gifts (unless cost 130g/km
• Interest on late payment of tax
• Accrued pension contributions

Question 2

How do you time apportion for AIA?

Answer 2

Time apportion the ALLOWANCE amount and not the amount going into capital allowances. For example for a 6 month period it is 500,000 * 6/12

Question 3

Do you need to pro-rate for WDA?

Answer 3

Yes, when it is going in to the capital allowances section for the length of the ACCOUNTING PERIOD

Question 4

Do you pro-rate for FYA?

Answer 4

No

Question 5

How do you tax the profits of a company ceasing to trade?

Answer 5

Tax all the profits that end in the tax year of cessation less the overlap profits

Question 6

If a car with a TWDV of 17,000 is sold in the year for 14,500 in the year, does it incur a balancing charge or allowance and how much is it?

Answer 6

A balancing allowance of 2,500. Adjust accordingly for business use percentage

Question 7

When calculating the capital allowances claimable for a car used by an EMPLOYEE, do you factor in % used for business?

Answer 7

No mate

Question 8

When dealing with disposals to calculate capital allowances, what value do you subtract as the disposal value?

Answer 8

The lower of cost and the proceeds