Tax allowable depreciation

It depends on when the initial investment occurs (whether at the end of an accounting period or (more usually) at the start of an accounting period) and also whether tax is payable immediately or with a one year delay. If, as is the usual case, the investment is at the start of the first year (i.e. time 0), then the first capital allowance is calculated at the end of the first year (time 1). If tax is payable immediately, then the tax effect is then at time 1. If, on the other hand, there is a one year delay in tax, then the first tax effect due to the allowances is at time 2. For a full explanation you need to watch my free lecture on investment appraisal with tax. (If you watch all of our lectures, in order (with the free lecture notes in front of you), then you do not need a Study Text (only a Revision Kit). Our lectures are a complete course covering everything you need to be able to pass Paper F9 well).

I can understand - the nearer to the exam the more overloaded your mind gets. Best is to make sure you take breaks and relax a bit, then you usually find what seemed hard before suddenly becomes more obvious :-)

Thank you very much for the comment :-)