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Capital allowances available on assets purchased for use in a property business need not be claimed in full; the amount can be restricted by choice. The amount of allowances claimed in any one year can be restricted to bring the profit to the level of the personal allowance, thereby preserving the balance of allowances to be carried forward for future years.

This will be relevant if, for example, the owner’s total income for the year is less than the personal allowance.

Example:
Jane’s property business has a main pool written down value brought forward of £80,000. Profit for the year to 5 April 2017 is estimated to be £19,000; she has no other income.

The capital allowances calculation for 2016/17 will be:
Pool balance brought forward                                   £80,000
Writing down allowance possible at 18%    £14,400
Amount of claim (restricted)                       £(8,000)
                                                                             £(6,400)          
Balance of allowances carried forward                       £73,600
The tax liability calculation is:
Profit                                                                      £19,000
Less writing down allowance claim                            £(8,000)
Net profit                                                                 £11,000
Personal Allowance 2016/17                                     £(11,000)
Tax liability                                                              NIL

This is a sample tip taken from our 165 page guide:

101 Tax Tips For Landlords 2016/17