Capital Allowances / FYA
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Hi
Dealing with my husbands accounts (sole trader). He purchased IT equipment for his business in March 2006. The FYA for 05/06 was 40%. He did not commence trading until August 2006 (FYA for 06/07 was 50%).
I know that expenditure incurred before trading begins is to be treated as being incurred on the first day of trading. However, I recall that this doesn't apply to IT/communications equipment and that the FYA relevant to the time of purchase should be used?
Can anyone confirm for me please? Should I use 40% or 50% FYA?
Many thanks.
Sharon
Dealing with my husbands accounts (sole trader). He purchased IT equipment for his business in March 2006. The FYA for 05/06 was 40%. He did not commence trading until August 2006 (FYA for 06/07 was 50%).
I know that expenditure incurred before trading begins is to be treated as being incurred on the first day of trading. However, I recall that this doesn't apply to IT/communications equipment and that the FYA relevant to the time of purchase should be used?
Can anyone confirm for me please? Should I use 40% or 50% FYA?
Many thanks.
Sharon
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Comments
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Re:Capital Allowances / FYA
If the equipment was purchased for and used by the business prior to trading then full FYA can be claimed at 2006/07 rates with the relevant date being the first day of trading, as you suggest.
However, if the asset was first used for a private purpose and then 'introduced' to the business then no FYA can be claimed. Normal WDAs can be claimed.
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Re:Capital Allowances / FYA
Thanks very much for clarifying that! The computer was purchased for and used by the business prior to first day of trading (to design artwork, stationery, arrange orders etc) so I will use the 50% FYA.
Thanks again!0 -
Re:Capital Allowances / FYA
Be it that this is a computer, are you sure there is no private use?
Regards
Dean0