capital allowance/dep'n in 1st year of trading

eddy2309

I have a new client who has £10,500 of capital expenses in the first year of trading. His Net profit for year end 05.04.14 is £6,244, so well below the tax free allowance limit, but expected to be much higher next year. What would you suggest is the best way to deal with the £10,500? Obviously he cannot claim AIA next year for something bought in the previous tax year? or can he?!

paulstafford

Did he have any other income in the 13/14 tax year eg employment? You could then claim the aia in 13/14 and offset the loss against this income.

Gem7321

No you cannot carry forward AIA. If you cannot utilise the capital allowances as paul suggests then disclaim them and use WDA in future years.

eddy2309

That's as I thought. Thanks for the help

Gem7321

Agreed but overlap profits need to be considered in relation to any saving generated