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Where Taxpayers and Advisers Meet

Annual Investment Allowance: Balance Sheet

akstsstjs
Posts:4
Joined:Thu Jun 03, 2021 6:53 pm
Annual Investment Allowance: Balance Sheet

Postby akstsstjs » Tue Jun 15, 2021 4:15 pm

When I comes to my annual Tax Returns I claim 100% AIA on the appropriate items - no problem.
I have never completed and submitted a Balance Sheet as I am not required to do so because I am a Partnership.
I calculate my Capital Allowances due on a simple spreadsheet.
The spreadsheet shows the year on year reduction in the asset values of the 2 cars used for business purposes - no problem.
To date I have assumed that every year, the 100% AIA claimed = 100% reduction in the AIA Asset Value, i.e. £0.
My understanding is that I need to retain the AIA Assets in the 'Balance Sheet', at £0 asset value, just in case I sell some of them, in which case I would have to pay a Balancing Charge?
But now I am wondering: am I doing this right? and, this doesn't seem to accurately reflect the value of my assets?
I have been buying AIA Assets every year, but according to my ''Balance Sheet' they are £0 value?
I'm confused, can someone explain?
TIA

robbob
Posts:3149
Joined:Wed Aug 06, 2008 4:01 pm

Re: Annual Investment Allowance: Balance Sheet

Postby robbob » Tue Jun 15, 2021 4:57 pm

Your calcs seem fine preusming its all eligible stuff - eg not non electric car - not leasehold improvements - not premises additionas and preusming any private use element has been "disclaimed"

I have been buying AIA Assets every year, but according to my ''Balance Sheet' they are £0 value?
Ok everything was fine till tis point as you said you didn't have a balance sheet.
If you meant to say "have been buying AIA Assets every year, but according to my ''tax computation written down value ' they are £0 value"

Then all is well and good with the world

akstsstjs
Posts:4
Joined:Thu Jun 03, 2021 6:53 pm

Re: Annual Investment Allowance: Balance Sheet

Postby akstsstjs » Tue Jun 15, 2021 7:00 pm

Thanks. That's good that my amateur process is AOK :D
That just leaves the issue of, what if I start producing a Balance Sheet?
Would the value of my AIA assets be written down to £0 at the end of each Accounting Year?
And if so, doesn't that give a distorted view of the actual value of my assets?

bd6759
Posts:3586
Joined:Sat Feb 01, 2014 3:26 pm

Re: Annual Investment Allowance: Balance Sheet

Postby bd6759 » Tue Jun 15, 2021 9:38 pm

Capital Allowances are a tax concept, not an accounting one. This CA computation would not be in your balance sheet.

If you had a balance sheet it would show the cost of your assets less depreciation in accordance with your depreciation policy.

If you had proper accounts, depreciation would be a p&l expense.


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