What is the difference between capital allowances and depreciation?

Capital allowances are the tax-deductible equivalent of accounting depreciation, set by government tax rules, whereas depreciation is an accounting concept to spread an asset's cost over its useful life.

How many hours should I spend on capital allowances?

Focus on mastering the technique, not just logging hours. Aim for 2-3 focused one-hour sessions this week to learn the rules and practice the pro forma. Quality of study is more important than quantity.

What happens if I put an asset in the wrong pool?

You will lose the mark for placing the asset, and any subsequent WDA calculation for that pool will also be incorrect. This is why correctly identifying the asset type first is so critical.

Is the AIA limit of £1,000,000 examinable?

Yes, you must know the AIA limit. While exam questions may not always test it by exceeding it, you are expected to state the rule and apply it correctly.

I'm scared I'll forget the WDA rates in the exam. What should I do?

The main WDA rates (18% and 6%) are provided in the tax rates and allowances sheet in the exam. Your task is not to memorise them, but to know when and how to apply them correctly.

Am I ready to move on from this topic?

You are ready when you can consistently complete a mixed-asset question, like the worked example, using the correct pro forma in under 15 minutes without looking at your notes.

What is the purpose of the special rate pool?

The special rate pool is for assets that the government wants to provide allowances for more slowly, such as long-life assets, thermal insulation, and high-emission cars.

Can I claim AIA for a car used purely for business?

No, cars are explicitly excluded from the Annual Investment Allowance, regardless of whether they are for business or private use.

TX Taxation (UK)

Capital Allowances (TX): A Complete Guide

Master capital allowances for your ACCA TX exam. This guide covers the main pool, FYA, AIA, and special rate pool with a worked example to secure marks.