Capital allowances, BTC, Osborne book

talinka Registered Posts: 45 Regular contributor ⭐
Hello everyone!
I am struggling with the task 6.4 in Osborne BTC book, and there are no answers available.
The adjusted trading profit for a sole trader is calculated as £12,000 before deduction of capital allowances. I have calculated cap.allowances as £29,160.
Therefore Trading Income is zero? What happens to the rest of the cap.allowances, are they transferrable? What are the options available to the business owner?
Thank you.


  • Bookworm55
    Bookworm55 Registered Posts: 479 Dedicated contributor 🦉
    I don't have that particular book because I did BTC a couple of years back, but...

    Capital allowances are a maximum. You don't have to use them all if you don't want to. It's perfectly allowable to take £12,000 to reduce trading income to zero, and leave the rest in the pool to be used in later years.

    Don't forget about the personal allowance too: if you don't use that it's gone. So it might be worth taking even less capital allowances if there are few or no other sources of income. That might be what the question's about: reducing the amount of tax paid to as low as possible within the rules but without wasting any allowances.
Privacy Policy