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What happens if a trader buys a low emission car (<95g/km) in let’s say the third year of trading. I understand they will receive a full WDA in Year 1 on the First Year Allowance rule, but does this rule apply to following years also, if not what is the correct treatment?
Thanks
Eamonn
Eamonn I think that again you need to listen to the chapter 5 lectures as clearly from your question you have not properly understood the difference between a WDA and a FYA!
If a trader purchases a low emission car then it is a FYA received NOT a WDA and as the FYA is 100% then that is the only allowance that will be received in relation to that purchase.
I presume you may have studied this before the lectures became available this week but I would very much recommend that you now listen to and work through the lectures with the course notes.
Good luck with your studiesThanks for your reply. I have gone through the course notes and examples and always the low emission car purchase was in the first year of trading. My question was what happens if the trader buys a low emission car in the second year of trading, does the FYA (First year allowance) still apply?
In chapter 5 on capital allowances neither illustration 2 nor example 6 in which FYA is shown deal with the first year of trading – both are continuing businesses with tax wdv’s brought forward from the previous accounting period!
First Year Allowance does not refer to the first year of trading, it refers to the (first) year in which the expenditure is incurred so FYA will be available if a low emission car is purchased in any accounting period apart from the final period of trading.Good afternoon,
I have a question regarding the FYA and WDA.
If a company buys a low emission second hand car, I know they won’t be entitled to the FYA since the car has to be new, but could they claim the 18% WDA on that accounting period? I would think they can, but I would prefer to double check it with you :).
Many thanks!
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