APC - Taxation > Case study > Flashcards

Case study Flashcards

(49 cards)

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1
Q

Define capital allowance.

A

A tax deduction for the depreciation of an asset over time.

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2
Q

True or false: Capital allowances can reduce taxable profits.

A

TRUE

They allow businesses to write off the cost of assets against taxable income.

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3
Q

Fill in the blank: Plant and machinery are eligible for _______ allowances.

A

capital

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4
Q

What is the Annual Investment Allowance?

A

A tax relief allowing businesses to deduct the full value of qualifying assets in the year of purchase.

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5
Q

Define writing down allowance.

A

A tax deduction based on a percentage of the remaining value of an asset each year.

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6
Q

True or false: Intangible assets qualify for capital allowances.

A

FALSE

Intangible assets like patents do not qualify for capital allowances.

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7
Q

What is a first-year allowance?

A

A type of capital allowance that allows businesses to claim a higher deduction in the first year of an asset’s use.

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8
Q

Fill in the blank: Enhanced capital allowances are available for _______ technology.

A

energy-saving

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9
Q

Define short-life assets.

A

Assets expected to have a short useful life, allowing for accelerated capital allowances.

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10
Q

True or false: Capital allowances can be claimed on leased assets.

A

TRUE

Businesses can claim allowances on qualifying leased assets under certain conditions.

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11
Q

What is the main rate for writing down allowances?

A

The standard rate is currently 18% per year for most assets.

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12
Q

Fill in the blank: Qualifying expenditure must be incurred on _______ assets.

A

capital

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13
Q

Define capital expenditure.

A

Money spent on acquiring or improving fixed assets that provide long-term benefits.

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14
Q

True or false: Capital allowances can be claimed on repairs.

A

FALSE

Repairs are considered revenue expenditure and do not qualify.

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15
Q

What is the writing down allowance rate for special rate assets?

A

The special rate is currently 6% per year.

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16
Q

Fill in the blank: Business cars can qualify for _______ allowances.

A

capital

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17
Q

Define capital allowance pool.

A

A collection of assets grouped together for the purpose of calculating capital allowances.

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18
Q

True or false: Unused capital allowances can be carried forward.

A

TRUE

Businesses can carry forward unused allowances to future tax years.

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19
Q

What is the capital allowances scheme?

A

A set of rules governing how businesses can claim capital allowances on assets.

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20
Q

Fill in the blank: Research and development costs may qualify for _______ allowances.

21
Q

Define energy-saving technology.

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A

Innovative technology that reduces energy consumption, eligible for enhanced capital allowances.

22
Q

True or false: Capital allowances can be claimed on residential properties.

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A

FALSE

Capital allowances are generally not available for residential properties.

23
Q

What is the maximum Annual Investment Allowance?

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A

The maximum is currently £1,000,000 per year.

24
Q

Fill in the blank: Capital allowances help businesses manage their _______ liabilities.

25
Define **qualifying assets**.
Assets that meet specific criteria to be eligible for capital allowances.
26
True or false: **Capital allowances** can be claimed on improvements to existing assets.
TRUE ## Footnote Improvements that enhance the value or extend the life of an asset qualify.
27
What is the **impact of capital allowances** on cash flow?
They can improve cash flow by reducing tax liabilities, freeing up cash for investment.
28
Fill in the blank: **Capital allowances** are a form of _______ relief.
tax
29
Define **capital allowance claims**.
The process of applying for tax deductions on qualifying capital expenditures.
30
True or false: **Capital allowances** can be claimed on assets sold.
FALSE ## Footnote Once an asset is sold, capital allowances cannot be claimed on it.
31
What is the **purpose of capital allowances**?
To incentivize investment in business assets by providing tax relief.
32
Fill in the blank: **Capital allowances** can be claimed on _______ purchases.
qualifying
33
Define **tax relief**.
A reduction in the amount of tax owed, often through allowances or deductions.
34
True or false: **Capital allowances** are only available to large businesses.
FALSE ## Footnote Small and medium enterprises can also claim capital allowances.
35
What is the **capital allowances threshold**?
The minimum amount of expenditure required to claim capital allowances, often set at £1.
36
Fill in the blank: **Capital allowances** are calculated based on the asset's _______.
cost
37
Define **business asset**.
An asset owned by a business that is used for commercial purposes.
38
True or false: **Capital allowances** can be claimed on personal assets.
FALSE ## Footnote Only assets used for business purposes qualify for capital allowances.
39
What is the **effect of capital allowances** on profit?
They reduce taxable profit, leading to lower tax liabilities.
40
Fill in the blank: **Capital allowances** are part of the _______ system.
taxation
41
Define **capital allowance rates**.
The percentage of an asset's value that can be claimed as a tax deduction.
42
True or false: **Capital allowances** apply to all types of assets.
FALSE ## Footnote Only specific types of assets qualify for capital allowances.
43
What is the **impact of capital allowances** on investment decisions?
They encourage businesses to invest in new assets by providing tax incentives.
44
Fill in the blank: **Capital allowances** are essential for _______ planning.
tax
45
Define **capital allowances legislation**.
The laws and regulations governing how capital allowances can be claimed.
46
True or false: **Capital allowances** can be backdated.
TRUE ## Footnote Businesses can claim allowances for previous years under certain conditions.
47
What is the **relationship between capital allowances and depreciation**?
Capital allowances provide tax relief for the depreciation of business assets.
48
Fill in the blank: **Capital allowances** help businesses offset their _______ costs.
capital
49
Define **capital allowances review**.
An assessment of a business's capital allowances claims for accuracy and compliance.
APC - Taxation
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