ACCA Taxation (TX-UK) Capital Allowances Special Rate Pool (part 2)
Reader Interactions
Comments
Leave a Reply
You must be logged in to post a comment.
Free ACCA & CIMA online courses from OpenTuition
Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams
20% off ACCA & CIMA Books
OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>
So well-explained! Thank you very much sir! I love you lectures.
Hello,
In illustration 2, why is the WDV b/f of £40,000 not further deducted for WDA of 18%.?
Thank you!
Oh figured, its combined to the other additions in the main pool and deducted at the end.
Dear Sir,
in Illustration 3 why the cost of machinery of 45 000 pound is not in special rate pool?
Thanks in advance for the answer
If we take the additions in the purchase order, the machinery would be 100% AIA, then we would have 155 000 left from AIA 100% and 75 000 in pecial rate pool.
Or it is ok to take the additions in the order of their value and the machinery stays in main pool because does not accomplish none of the special pool rate criteria, even if it is over the limit of 200 000?
Is there something I am missing?
Thank you
Dear miss,
ONLY purchases of plant or machinery which EXCEED 200,000 Annual Investment Allowance limit are carried over to the WDV allowance column and ALLOWANCE is calculated at 18% unless the items are , 1. Integral features of a building. 2. long life asset( an asset the life of which exeeds 25 years and is purchased at over 100,000), (3) thermal insulation of building, (4) motor cars with emissions over 130 gms/ km.
Therefore as stated above an asset can ONLY be taken to the special rate pool and allowed deducted at 8 % if it falls under any of the 4 heads mentioned above. As in the example, 45000 worth of machinery is taken to the main pool as the long life asset is 230,000 which eats up the entire 200,000 AIA , therefore the excess 30,000 has been taken to the main pool and so will be any further purchases.
hope this helps.
In illustration 3, why did you took 45000(Machinery) to Main pool instead of Special rate pool? Because earlier it been mentioned that before taking it to the main pool it is necessary to take it to special rate from from AIA
I think it is because it allows to obtain maximum allowance.
If machinery would be allocated to the AIA 100% allowance, then the remaining allowance available would be ( 75000 pounds × 8% special pool rate) 6000 pounds.
Machinery is not qualified for special rate pool and can be included in the main rate pool. Therefore by allocating machinery to the main pool the allowance available is ((45000 pounds × 18% main pool rate) + (30000 pounds × 8% special pool rate)) 10500 pounds which is higher than the 6000 pounds available if machinery was allocated to the 100% AIA allowance.
I hope this is helpful.
Dear teacher, Why did you deducte in end of vedio the 500 why not the cost of 3000 as said in example
The deduction of 500 is the Proceeds which is lower than the original cost . refer to section 5 <>
Because we ONLY deduct the sale proceeds and not the original cost. Section 5 says we deduct sale proceeds upto the cost, it means that if SPCOST we take cost as deduction