(1).
Statement A is false.
Expenditure incurred in the seven years prior to the commencement of trade is treated as having been incurred on the first day of trading.
Statement B is true.
(2).
(i) Business is unincorporated
The annual investment allowance will be increased to £1,250,000 (£1,000,000 x 15/12). Accordingly, the capital allowances for the 15-month period will be 100% of the cost incurred of £310,000.
(ii) Business is a company
For a company, the 15-month period of account ending on 30 September 2021 must be split into two accounting periods: one for the first 12 months ending on 30 June 2021 and the other for the remaining three months ending on 30 September 2021. The machinery purchased on 1 September 2021 falls into the second accounting period.
Main pool £ | Allowances £ | |
|---|---|---|
| Three-month period ending 30 September 2021 | ||
| Additions qualifying for AIA | 310,000 | |
AIA (maximum £100,000 x 3/12) | (250,000) | 250,000 |
| 60,000 | |
| WDA (18% x 3/12) | (2,700) | 2,700 |
| 57,300 | 252,700 |