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HMRC internal manual

Business Income Manual

TMIA – Other Considerations: Capital Allowances


If an individual claims the trading allowance they are not allowed to deduct any allowable expenditure from their profits for the same period, including any capital allowances. 


This is illustrated by the example at BIM86080.


It is up to the individual to determine for each chargeable period whether to claim the trading allowance or to deduct allowable expenditure, including capital allowances. 


Certain capital allowances, such as the Annual Investment Allowance (see CA23080) and First Year Allowances (see CA23100), can only be claimed in the chargeable period in which the expenditure is incurred.


If an individual claims the trading allowance and in later periods opts to claim capital allowances, the normal rules for capital allowances apply (see CA20000). So in years when an individual uses the trading allowance they will not deduct any capital allowances, and the figure in their capital allowances pool will remain unchanged. Using the trading allowance does not affect individual’s ability to claim capital allowances in future years.


Qualifying capital expenditure incurred in one chargeable period may be pooled, and writing down or balancing allowances claimed in a return for a later period. Guidance on pooling expenditure can be found at CA23210.