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S4M101
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Hello tutor,
While computing the capital allowance for a company, is it mandatory for the purchase of new plant and machinery to firstly attract the 100% AIA before attracting the 130% FYA? or can it directly go to the 130% super deduction?
Thanks in advance.
Tax Tutor
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Have you worked through the OT lectures and Study Notes?
S4M101
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yes, I had worked through the OT lectures and study notes, and the concept was clear from it.
however, one of the question from the latest FA 2021 BPP study text had me confused.
Illustration3: Computation of trading profits and TTP (pg 559)
since the question is very long, I will just type out the relevant information necessary for the computation of the capital allowance.
(7) plant and machinery
On 1 April 2021 the tax written down value of the mainpool was £22,500. The following transactions took place during the year ended 31 March 2022:
10June 2021 Purchased general plant- £20200
25January 2022 Sold a van (original cost £17,000)- (£11500)
15March2022 Purchased a motor car CO2 emissions 48g/k- £10600Here instead of using the 130% super deduction for the general plant, AIA of 100% is taken instead.
Tax Tutor
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Firstly my apologies for delayed reply.
In relation to what you have said this would appear to be an updating error where the answer has not been updated for the new 130% allowance. It is a company (not an unincorporated trader) and it does not state that the plant and machinery is second hand so it must be assumed to be new and therefore the 130% allowance should be given.
S4M101
Tax Tutor
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