ExpertMedium2 marksMultiple Choice
ACCA · Question 27 · Corporation tax liabilities
Section B - Case 3: Titanium Forging PLC
Titanium Forging PLC is a heavy manufacturing company. It recently changed its accounting date, resulting in a 15-month period of account from 1 January 2023 to 31 March 2024.
During the period, the company purchased new, unused manufacturing equipment for £2,000,000. Assuming the 'full expensing' rules apply, what is the capital allowance available on this equipment in the year of purchase?
Section B - Case 3: Titanium Forging PLC
Titanium Forging PLC is a heavy manufacturing company. It recently changed its accounting date, resulting in a 15-month period of account from 1 January 2023 to 31 March 2024.
During the period, the company purchased new, unused manufacturing equipment for £2,000,000. Assuming the 'full expensing' rules apply, what is the capital allowance available on this equipment in the year of purchase?
Answer options:
A.
£360,000
B.
£1,000,000
C.
£2,000,000
D.
£2,600,000
How to approach this question
Identify the asset as new main pool plant and machinery. Apply the 100% full expensing rule introduced for corporate entities.
Full Answer
C.£2,000,000✓ Correct
Under the 'full expensing' rules (which replaced the super-deduction), companies can claim a 100% first-year allowance on qualifying new and unused main pool plant and machinery. Therefore, the entire £2,000,000 can be deducted in the year of purchase. There is no upper limit, unlike the AIA.
Common mistakes
Limiting the deduction to the £1m AIA limit or applying the old 130% super-deduction.
Practice the full ACCA TX — Taxation Practice Exam 4
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