Annual Investment Allowance Query

steveksullivan

I understand the basics of this but my specific question is:

I have a very small tax bill of less than £1000 total.

I have read that if you have less than £1000 of Capital Allowances remaining in your pool you can use them all immediately under the new AIA system.

Under the OLD system you could write down anything upto 25% per year (after the first year) and could 'carry over' the remainder.

Under the new legislation I have seen nothing on the t'interweb that implies you can carry over anything you dont use - only that you can use it all in the first year......

Hope thats clear and can anyone point me at some wording anywhere?????

Thanks in advance !!!

Elaine_Wilson

The write off of a small pool balance is completely separate from the AIA.

You need to claim your AIA based on purchases made during the year. If you decide not to claim 100% on all the additions, or if the purchases are more than the limit, then the balance is added to the pool.

Now look at the pool. Take the balance brought forward from last year, deduct the sale proceeds of any assets sold and add any capital expenditure on which AIA has not been claimed. If this figure is less than £1,000 then you can claim the whole amount as Writing Down Allowance, not AIA. This is not counted towards the limit of £50,000 for AIA.

Don't forget the rate of WDA changed to 20% from 6th April 2008 for individuals (1st April for companies).