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Tax Question


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Not specifically a property query but when writing down equipment for tax purposes as a small company you can take a first year allowance for it of 50% instead of 25% which is all you can allow for in subsequent years until it is written off or disposed of. But the Inland Revenue show examples of people not taking the first year allowances and just taking 25%, what if any would be the benefit of only taking 25% and extending the period of years it takes to write off the expense. I'm guessing none?



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Hi Mat

The usual reason is where a company is making a loss. There is often no point in increasing a loss which will otherwise be carried forward. Another reason may be where there is no intention to keep the asset longer term a company may prefer a more even write off period (for example if an asset is written down 50% in the first year and sold the following year for 75% of it's original cost, then a company may prefer not to mess around with First Year (FYA) and Balancing Adjustments).

FYA's are not obligatory therefore if a company prefers not to claim that is up to them. However if they are not claimed in the first year, then normal Writing Doen Allowances apply.

There are also exclusions to First Year allowances (CA2001 s46(2)) and also be careful of the sizes of the companies in question as to what is avaiable.

Hope this helps


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