Capital allowances are available on the purchase of certain fixed asset items used in a letting business.
Expenditure in excess of the Annual Investment Allowance limit is transferred into a ‘pool’ and claimed (‘written down’) over a period of several years (generally at 18% per annum).
If any assets in the pool are subsequently sold, the proceeds are deducted from the pool amount brought forward before reducing the value against which further writing down allowances can be claimed.
Example:
The brought forward balance on the capital allowances pool claim in Jane’s property portfolio as at 31 March 2013 was £85,000.
Assets comprising the main pool were sold for £20,000 during the year 2013/2014. The calculation claim is:
|
Pool balance brought forward |
£85,000 |
|
Sale of assets |
£(20,000) |
|
Balance |
£65,000 |
|
Writing down allowance (18%) |
£(11,700) |
|
Balance of allowances carried forward |
53,300 |
|
Total allowances claimed |
£11,700 |
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