Taxation of the unincorporated business for ATX (UK) - part 4: self-test answers

Test your understanding: answers

(1).

Statement A is false.
Expenditure incurred in the seven years prior to the commencement of trade is treated as having been incurred on the first day of trading.

Statement B is true.


(2).

(i)
Business is unincorporated
The annual investment allowance will be increased to £1,250,000 (£1,000,000 x 15/12). Accordingly, the capital allowances for the 15-month period will be 100% of the cost incurred of £310,000.

(ii) Business is a company
For a company, the 15-month period of account ending on 30 September 2020 must be split into two accounting periods: one for the first 12 months ending on 30 June 2020 and the other for the remaining three months ending on 30 September 2020. The machinery purchased on 1 September 2020 falls into the second accounting period.

 

Main pool £

Allowances £
Three-month period ending 30 September 2020  
Additions qualifying for AIA310,000 

AIA (maximum £100,000 x 3/12)

(250,000)250,000

 

60,000 
WDA (18% x 3/12)(2,700)2,700
 57,300252,700