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ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: the scope of corporation tax, including close companies and investment companies

Gorse Ltd buys a second-hand car with zero CO2 emissions for £20,000 and a new car emitting 120 grams per kilometre for £25,000, both added to pools in the year. The annual investment allowance is already fully used. Using the ATX-UK tax tables, what is the total writing down allowance on these two cars in the year?

The total allowance is £5,100: £3,600 at 18% on the second-hand zero-emission car and £1,500 at 6% on the car emitting over 50g/km. Only new zero-emission cars get 100% first year allowance.

  1. A£5,100Correct
  2. B£3,600
  3. C£2,100
  4. D£45,000

Explanation

The second-hand zero-emission car goes into the main pool at 18%: £20,000 x 18% = £3,600. The car emitting over 50g/km goes into the special rate pool at 6%: £25,000 x 6% = £1,500. Total = £5,100. £3,600 omits the second car, and £2,100 reverses the rates.

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