Question 1

Section B - Case 1 (NovaStream Ltd)

In May 2023, NovaStream Ltd purchased new, unused computer servers for £1.2 million to expand its cloud capacity.

Assuming the Annual Investment Allowance (AIA) limit is £1,000,000, what is the maximum capital allowance NovaStream Ltd can claim on these servers in the 12-month accounting period to 31 December 2023? (Ignore First Year Allowances for this calculation).

Accepted Answer

Apply the AIA up to the £1m limit. Put the excess into the main pool and calculate the 18% WDA. Add AIA and WDA together.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to claim WDA on the excess over the AIA limit.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 2

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