Lecture on Personal Allowances - Example 9

In the answer you should see that the total income is 206,000 which in the absence of any relevant deductions is also the net income and the adjusted net income. As this exceeds 100,000 by 106,000 it would give rise to a reduction in the PA amounting to 53,000 clearly therefore extinguishing any PA. The answer also says that you could simply have made the statement that the PA will be nil as the ANI exceeds 120,000 - I simply included the calculation as proof and stated that either answer would be acceptable. I note your later comment about not answering your question. I had a week's holiday as the administrator informed you.

Hello Thank you for explaining this. It does make much more sense now. Yes I did not realise this especially as this was the first time I had written to you. I hope that you had a great holiday and I look forward to receiving your help and guidance so I can pass this exam in September! I did write some comments under some of the lectures where I had questions on them. Admin advised me to write them in this section Ask the Tutor so I can do this if it would be easier for you to have them all in one place? I have so far covered Chapters 1 - 6 of the Lectures.

Here is the first one: Capital Allowances Small Pools WDA....lecture Going back to what michael has said regarding the y/e 31/12/14, does this mean that the AIA is apportioned to 9/12 x £500000? In terms of if it were to be over the annual limit (in question 2 this wouldn’t be relevant as total is only £6600)?

I've looked on every lecture page so if I did ask anything else I cannot find it.

Hi Chloe Yes, please address any questions through Ask the Tutor. In respect of your "first one" above I'm not absolutely certain what your queries are? The small pools WDA simply states that if after the disposals of the accounting period have been deducted from the relevant pool the balance on that pool does not exceed 1,000 then the full remaining amount of tax wdv will be available to be claimed rather than the relevant 18% or 8% WDA claims. In calculating AIA you will NOT have to deal with an accounting period spanning April 6, 2014 hence you will not see the y/e 31/12/14. AIA would only be restricted to 9/12 x 500,000 if the accounting period itself was only 9 months long for example the 9 month period to 31 March 2015. If the accounting period is 12 months then the full 500,000 is available. Clearly if the qualifying AIA expenditure is less than this maximum limit then the full expenditure will qualify for the 100% AIA

I understand the small pools WDA part. Do you need to show your working for the restricted AIA amount? In this example are you saying that the accounting period is not 9 months long and it isn't 9/12 x 500000? Thanks

If the accounting period is less than 12 months then you should indeed show the calculation of the time apportioned available AIA. In the example you quote you use the Y/E 31/12/14. This is a YEAR it is NOT 9 months so the full AIA will be available and remember as I said previously you will not be tested on an accounting period spanning 6 April 2014 at which date the level of AIA actually changed which is why this issue is excluded from the syllabus - to keep it simple!

Right I've got it now! Thanks :)