Jonah started trading on 1st February 2019 and made his first accounts up to 30th April 2020 (15 months). Profit before deduction of capital allowances was £45,000 for the period. Additions and disposals during the period for capital allowances purposes were:”

“Additions                                                                      £

Office equipment and furniture                                 5,000

New car 1 with CO2 emissions of 44 g/km             14,000

New car 2 with CO2 emissions of 76 g/km             15,000

New car 3 with CO2 emissions of 121 g/km           24,000

New car 4 with CO2 emissions of 123 g/km           28,000”

“Cars 3 and 4 were used 30% privately by Jonah, cars 1 and 2 are used by employees.”

“Disposals                                                                      £

New car 3 with CO2 emissions of 121 g/km           25,000”

“Calculate the following:

a. The maximum capital allowance claims for the 15 months ended 30 April 2020. 

b. “Profit assessments for Jonah for the tax years 2018/19 to 2020/21 and the overlap profits carried forward. 

c. “Explain and illustrate how the historic profits of a trade are assessed in full only once during the life of business under the current year basis of assessment rules. Are there any disadvantages to these rules of assessment?

Answer rating: 100% (QA)

The expenditure must be on a particular type of asset Generally you must own the asset on which the ... View the full answer