Test your understanding
(1). State whether the following statements are true or false in respect of a trader commencing a new unincorporated business.
A Expenditure paid for or incurred in the seven years prior to the commencement of trade is treated as having been paid for or incurred in the first tax year of trading.
B Under the accruals basis, capital allowances are given in respect of the cost of assets purchased for use in the business prior to the commencement of trading.
(2). Martyn established a new unincorporated business and began trading on 1 July 2025. He elects to be taxed on the accruals basis and will prepare accounts for the 15-month period ending 30 September 2026. Initially he rented the machinery he required but, on 1 September 2026, he purchased machinery for £1,100,000.
What are Martyn’s capital allowances for the 15-month period?
