# Capital Allowances Special rate pool Example 11

1. chiclarence says:

i still have some issues with capital allowances on cars: i know that cars with CO2 greater than 160 go to the special rate pool and the WDA is 10%. but i always get confused with is if cars bought before 5 April 2009 also have WDA at 10% or 20% (ie old expensive cars. can you help please

• captmario says:

@chiclarence, Cars bought before 5 April 2009 have nothing to do with CO2 omissions. They have a simple rule that if they cost more then 12000 they keep a separate column and cant be given WDA of more then 3000 p.a.
Examiner can confuse you by giving CO2 omissions of Cars bought before the 5th April 2009, But they are irrelevant.

2. uuuu says:

very good lecture. it really clarify my concepts. Thanks tutor

3. activehands says:

I thougth Expensive car has a max. of £3000 to be included in the Allowance,why then did he add £4800 to the Allowance colum

• prit says:

@activehands, car is been disposed off on loss i.e £ 6000 , and £ 6000 allowance is given on loss which is called balancing allowance and charges. £ 4800 allowance is counted as 80% of £ 6000 coz, car is used for private purpose 20 % . so only 80 % is used for business.

• prit says:

@activehands, Also , if car was disposed off on profit for eg. £16000 then profit £ 2000 wil b deducted as £ 2000 charges.

therefore, if it is loss on disposal , balancing allowance , if profit then balancing charges

4. Sakib says:

that was mean to be an @ sign, not a colon : !!

I was indicating to the chap that he forwards the lecture to 30mins30secs to see this point…….

funny !…. not !

5. Hello
I think total AIA is 18,800 + 84,700+10,000+6,000=119,500 so 18,800 go to SR of 10% 100,000 to Allowance and 700 to GP of 20%.
Am I missing something?

• nebojsha0603 says:

@chrispantazis, wrong, SR is being deducted from AIA before GP thus you’ll have 18,8K + 6K + 75,2K (what has left up to 100K) allowed under AIA while 9,5K (excess on machine) + 10K should join 11,2K car at GP as 30,7K + WDV b/f 22,7k you’ll have 53,4K in GP for 20% WDA…

• @nebojsha0603, Thank you… this was not what I asked exactly… I have already realised the calculation in terms of reaching the 100,000 threshold. Allow me to elaborate! What I do not get is: why is the 18,800 being included within the above 100,000 and not go into the special rate pool. In this case there would be 18,800 at 10% and just 700 extra at 20%. Is it a requirement to include SR items in the 100,000 allowance before any other items or is it just a matter of increasing the capital allowance? Does this make any sense…

• nebojsha0603 says:

@chrispantazis, oh, understood! as per my understanding there is no special rule that says you “must” include SR into AIA first, however, as a sole proprietor you would like your adjusted trading profit to be as low as possible thus you would like your capital allowance to be as high as possible. By deducting the SR from AIA you make sure that more of the assets that would be written down by 10% goes into allowance at full value leaving less AIA for GP at WDA 20%… hope this make sense

• @nebojsha0603, Thank you very much for taking the time to elaborate. My thoughts exactly. It is a matter of increasing the capital allowance as I point in my earlier response, hence decreasing the adjusted profit as you point out very rightfully so. I only wonder how strict is the SR pool. If the law states that certain items are to be SR (10%) and we include that in the GP then are we avoiding tax or are we tax evading? In other words is it mandatory to transfer SR items to 10% WDA or by using the 100,000 AIA allowance we simply bypass the law (and not brake it)..?
Cheers

6. Sakib says:

: 30mins 30 secs, the figure of £53,400 takes into account the WDV b/f of £22,700.

£22,700 + £19,500 + £11,200 = £53,400 (20% WDA taken from this)

i hope this helps.

• crye says:

@Sakib, If 30mins 30 secs (1,830 secs) is the time you used to solve this question, you may need to work on your speed because you’re allocating like 17 marks (@ 108 secs per mark) for this question when it may only be a max of 10 to 12 marks in exam (these examiners are horrible!! LOL), I guess. Not because the number of items was few, but because it’s not a ‘twisted’ question. Hope that was a push up! LUCK!

• Sakib says:

@crye,

that was mean to be an @ sign, not a colon : !!

I was indicating to the chap that he forwards the lecture to 30mins30secs to see this point…….

funny !…. not !

• crye says:

@Sakib, Whatever. And at any rate, you have a way with presenting time in digital format. Only 5 days off, so just take it easy and grab some luck, bro!

7. What about theWDV b/f on the general pool of 22,000 pounds?