Maximum AIA calculations for split accounting periods

Source: HM Revenue & Customs | | 29/01/2019

The recent, and temporary, increase in the AIA to £1m from 1 January 2019 creates computational issues if a trader's accounting period straddles this date.

The following example published by HMRC illustrates one variant that you may encounter when considering AIA relief due to clients.

Where a business has a chargeable period from 1 July 2018 to 30 June 2019, the maximum AIA for this period would be £600,000 calculated as follows:

a) the proportion of the period from 1 July 2018 to 31 December 2018, that is, 6/12 x £200,000 = £100,000 and

b) the proportion of the period from 1 January 2019 to 30 June 2019, that is 6/12 x £1,000,000 = £500,000

£100,000 + £500,000 = £600,000.

However, in relation to (a), the part period falling before 1 January 2019, no more than a maximum of £200,000 of the company’s actual expenditure in that particular part period would be covered by its transitional AIA entitlement (the maximum claimable before the increase on 1 January 2019).



 

Latest News

Gifts out of disposable income
13/02/2019 - More...
There is an annual Inheritance Tax exemption of £3,000 for gifts. This exemption can also be carried forward to the

What work is covered by the CIS scheme?
13/02/2019 - More...
The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the

When do you pay Capital Gains Tax?
13/02/2019 - More...
Capital Gains Tax (CGT) is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made

Search News


Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login

» Cookie Policy

» Privacy Policy

Social Media

twit-new