Capital Allowances

[Valhall]

Hi All

This probably seems a silly question to those in the know but as I'm still learning thought i should ask!

I took on a file from a bookkeeper who has not done proper balance sheets but just added a sheet with capital allowances to the accounts.
The capital allowance amount for the last two years was used in the P & L as depreciation.

As the CA rate has now been changed and I am using the hybrid rate for my calculation (due to the year end) should i also change the amount of depreciation to reflect this. I was on the understanding that depreciation was set at purchase point and should continue at the same rate for the P & L. Is it normal for these two figures to differ.

Please help. Very confused!

[elainec100@cheapaccounting]

depn and CA are too different things.

I assume that the depn was added back on the tax calc and then the CA deducted - net effect of nil for past 2 years.

So this year record the depn at the rate in the notes tot he accounts or the rate set in previous years. Then add back in tax comp and deduct CA.

[Valhall]

Many thanks Elaine

Most Helpful
That is what I have actually done. I just felt happy getting confirmation as it just seemed confusing that I had a different figure for my WDA for the depreciation in the format I am used to since the previous bookkeeper didn't record depreciation in the file but instead recorded the WDA based on the Capital Allowances.

I just thought it was the norm to record depreciation and then deal with the CA for the tax return as a seperate entity and generally a different figure.

Am I wrong in assuming this is the way most people keep records.

[elainec100@cheapaccounting]

No that is the way most do it but if a bookkeeper may not have had the necessary experience to deal with CAs

[Valhall]

Thanks Elaine

Maybe I'm not as stupid as I thought I was:D

[elainec100@cheapaccounting]

Maybe I'm not as stupid as I thought I was:D

I can't answer that question :D:D:D:D