You can tailor your capital allowances claim to suit your circumstances. It is not a case of claiming either the AIA or WDA, nor is it necessary to use up any remaining AIA before claiming WDAs on the balance. Further, there is generally no requirement to claim capital allowances at all.
By mixing the claims you can claim the allowances that give the best tax result.
Example:
Adam is a sole trader.
In the year to 31 March 2016 he incurs capital expenditure of £17,000. He has unrelieved expenditure brought forward of £5,000.
His profit before the deduction of capital allowances is £26,000.
He claims an annual investment allowance of £14,000, reducing his profit to £12,000.
The remaining £3,000 of capital expenditure is allocated to the general pool. He could claim a writing down allowances of £1,440 (18% (£5,000 + £3,000)), but chooses instead to claim only £1,400.
The profit is reduced to £10,600, which is offset by Adam’s personal allowance for 2015/16 of £10,600. Tailoring the claim allows Adam to preserve his full personal allowance for the year.
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