ExpertHard2 marksMultiple Choice
ACCA · Question 24 · Income tax and NIC liabilities
Section B - Case 2 (GreenRoots LLP)
GreenRoots LLP purchased a diesel car (CO2 emissions 110g/km) for £20,000. Sarah uses this car 60% for partnership business and 40% for private use.
How are the capital allowances for this car calculated in the partnership's tax computation?
Section B - Case 2 (GreenRoots LLP)
GreenRoots LLP purchased a diesel car (CO2 emissions 110g/km) for £20,000. Sarah uses this car 60% for partnership business and 40% for private use.
How are the capital allowances for this car calculated in the partnership's tax computation?
Answer options:
A.
The car is placed in a single asset pool. The WDA is calculated at 18% and then restricted to 60%.
B.
The car is placed in the main pool (18% WDA). No restriction is made for private use in the partnership computation.
C.
The car is placed in the special rate pool (6% WDA) and restricted to 60%.
D.
The car qualifies for 100% First Year Allowances.
How to approach this question
Determine the correct pool based on CO2 emissions (110g/km > 50g/km = main pool). Remember the special rule for partnerships: assets owned by the partnership do not have capital allowances restricted for a partner's private use.
Full Answer
B.The car is placed in the main pool (18% WDA). No restriction is made for private use in the partnership computation.✓ Correct
.
Common mistakes
Restricting the capital allowance for private use (which only applies to sole traders/employees, not partnership-owned assets) or using the wrong emission threshold.
Practice the full ACCA TX — Taxation Practice Exam 2
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