CT600: capital allowances


Two questions to make sure I am calculating clients' capital (pool/wda/AIA) allowances correctly:

1. I have always assumed that the 20/18% rate is based on the balance carried forward - ie: calculated as per reducing balance, but I read somewhere (and typically now can't find reference) that capital allowances should be calculated as if straight-line? Could someone confirm which is correct?

2. I know that HMRC disapproves of changing your Capital Allowance policy claimed - ie: you can't claim for one capital allowance, and then change to another one next year, just because it happens to suit better. But I always assumed this was within pools - ie: if you have a pool from previous year's, which you have been using the WDA then you need to stick to the same policy, until written off. But if you make a one-off purchase (even if the same category/type) you could use AIA for this as a one-off. So I have (say) £3000 left of a £5000 IT pool bought over the last few years, and am using WDA. This financial year, client has spent £2000 on one IT item, which I can AIA?

Then it hit me I may not be correct in assumption and that this years purchase also needs to be pooled in same manner as previous years as per HMRC guidelines?

Thanks very much (as ever!) for any input,


  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    I think you may be confusing CAs and depreciation. CAs are calculated at 18% rb. You need to keep using CAs on the pool until it has reached a low level, then you can right off in one go - I think this is £1K (might need to check). As for the new purchase for £2,000, yes, you can claim this as AIA if the profits would benefit from this. Hope that all makes sense.
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