Do capital allowances have to be used?

sboyle01

In the case of a trade can capital allowances be carried forward if there is enough credits to cover the profits. e.g. profit 2000, capital allowances 2000 - If the personal credit is used then tax will be 0 and the capital allowances could be carried forward or is it compulsory to use the capital allowance to reduce the profit to 0.

I can't seem to find this answer clearly in the ACCA text book or on the revenue website.

Mr. Incognito

http://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCEQFjAAahUKEwiinOWC1pHGAhUuBtsKHUAtAE0&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Fpractitioner%2Flaw%2Fnotes-for-guidance%2Ftca%2Fpart12.pdf&ei=QcF-VeL3HK6M7AbA2oDoBA&usg=AFQjCNE44m7SdURJAzkk8KEkxOldGe7eIw&sig2=8rDYjKNs8KiwGtpajDRLaQ&bvm=bv.95515949,d.ZGU

sboyle01

Mr. Incognito wrote: »

http://www.google.ie/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCEQFjAAahUKEwiinOWC1pHGAhUuBtsKHUAtAE0&url=http%3A%2F%2Fwww.revenue.ie%2Fen%2Fpractitioner%2Flaw%2Fnotes-for-guidance%2Ftca%2Fpart12.pdf&ei=QcF-VeL3HK6M7AbA2oDoBA&usg=AFQjCNE44m7SdURJAzkk8KEkxOldGe7eIw&sig2=8rDYjKNs8KiwGtpajDRLaQ&bvm=bv.95515949,d.ZGU

This is much the same as my ACCA P6 text book. They keep talking about capital allowances and losses but I just want to know if I can use tax credits first to protect the capital allowances.

Alan Shore

If you have a profit from a trade and capital allowances from assets used for the purposes of the trade then you use them against the profits in the first year. If this creates a loss then you can set the loss against other income.

You are not obliged to use the loss but you are obliged to use the capital allowances when you are entitled to. In other words you can't "not claim" Capital allowances as it does not suit you.