Chapter 6, example 6 (ACCA-TX-UK-Notes 2020) TRADING PROFIT

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July 27, 2021 at 5:42 pm #629599
vikipulka
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(Chapter 6, example 6 (Open Tuition ACCA-TX-UK-Notes 2020, p.40 as per the pdf file/= p.52 as per Adobe)

Good day,
I have a question regarding this particular line :
20 October 2020 Motor car (CO2 emissions are 105 g/km) used privately by employee – 20%
private use) 10,400

Answer:
Motor car ( 51-110g/km) 10,400
WDA × 18% x 9/12 = 1,404. Allowances 1,404

My question:
Shouldn’t the allowances be 1,404 x 80% ? Because it was used only 20% privately.
As per my understanding, the logic should be in line with the logic for another car, where we calculate only the “business part”-use
July 28, 2021 at 10:18 am #629649
Tax Tutor
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You need to go back to chapter 5 section 6.1 and read the first line of this note and also part (d) to realise the error you have made
July 29, 2021 at 5:10 pm #629795
vikipulka
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Hm, not sure if I understand it, but could you please confirm if the following (below) is correct or not?

So following your advise,
“6.1 Where an asset is used by the owner of the business (this can be either a sole trader or a partner in a partnership) partly for business and partly for private purposes (typically a motor car), only the business proportion of the available capital allowances is given.
d. Private use by an employee of an asset owned by the business (again typically a car) has no effect on the business’s entitlement to capital allowances”

Case 1. Motor car (CO2 emissions are 170 g/km) used by Wendy – 60% business use 14,800
Case 2. Motor car (CO2 emissions are 105 g/km) used privately by employee – 20% 10,400
*”Wendy commenced in self-employment” – so it means that Wendy is the owner

My logic after reading the above paragraphs:
Case 1: Wendy is the owner, so should be calculated only 60% in allowances
Case 2: not the owner, but just an employee , so it should in accordance with the “d”-part, so 100% in allowances
July 30, 2021 at 3:10 pm #629867
Tax Tutor
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Correct!!
Have you been using the lectures in conjunction with the study notes?
August 4, 2021 at 3:52 pm #630383
vikipulka
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Perfect, thank you!
I was using study notes + ACCA website examples + UK gov tax website
August 10, 2021 at 10:48 am #631008
Tax Tutor
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Use the Study Notes with the lectures and read only the technical articles on the ACCA website as stated within the study notes. You will then also need an exam Q&A kit from an ACCA provider. These are the essentials.
If you wish you can also purchase a study text from an approved ACCA provider to use as a reference book NOT a reading book when you discover in some questions the occasional issue that you have not previously seen in our material.
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