Form 11 - Section 208 Capital Allowances

[Grimy]

Can someone explain the difference between Form 11 Section 208 (b) Capital Allowances for year 2011 and Section 208 (c) Capital Allowances used against rental income in the year 2011 ?

Lets say I had Capital Allowances of 5,000 remaining from last year. I expect to use say 700 in 2011 - what gets entered in the sections above ?

 

[mandelbrot]

If you have 5k of unused CA's from earlier years you enter these at panel 208a.

At panel 208b you enter the amount of CA's arising in 2011 (ie 12.5% x cost), let's say it's 2,000.

At panel 208c you enter the amount of CA's used to reduce your rental income in 2011 - let's say you have 3k of net rental income after deducting 75% of mortgage interest etc... (this is the figure in panel 207). You use 2k of current year allowances + 1k of the 5 carrying forward, and enter 3k to reduce your 3k of income to nil. So the amount you enter at 208c is limited to the amount of (208a+208b), or panel 207, whichever is lower.

 

[Grimy]

Mandelbrot, that is massively helpful for me. To me the headings are ambiguous and unclear. I just wanted to take your points to completion for me - no new capital allowances were created in 2011 (i.e. nothing new bought for the property), effectively the only capital allowances I will be using in the year is the 12.5% on capital allowances created in the past (a current balance of say 5k) - lets say the 12.5% this year = 700. Is this 700 what goes into 208 (b). So, 208 (c) for me should only be 700. Maybe my problem is mis-interpretation of what is carried forward to 208 (a) i.e. maybe I do not put in the 5k at all (it is not to be used in a single year).

so maybe it is ?
208 (a) = 0
208 (b) = 700
208 (c) = 700

Apologies that I cannot get my head around this.

I prefer the way it is reflected in the new form 11S which only shows panels 207 and 2008 (c) - maybe on Form 11 I could just fill in these 2 ?

 

[mandelbrot]

Mandelbrot, that is massively helpful for me. To me the headings are ambiguous and unclear. I just wanted to take your points to completion for me - no new capital allowances were created in 2011 (i.e. nothing new bought for the property), effectively the only capital allowances I will be using in the year is the 12.5% on capital allowances created in the past (a current balance of say 5k) - lets say the 12.5% this year = 700. Is this 700 what goes into 208 (b). So, 208 (c) for me should only be 700. Maybe my problem is mis-interpretation of what is carried forward to 208 (a) i.e. maybe I do not put in the 5k at all (it is not to be used in a single year).

From what you're saying the 5k is not capital allowances, it's the cost of the assets on which the capital allowances are being claimed (or the cost remaining after the capital allowances already claimed). Over a number of years the cost of an asset is written off as capital allowances.

You would only have an entry in panel 208(a) if you'd had a loss in the previous year(s) and therefore not been able to use the 12.5% capital allowance that year(s).

so maybe it is ?
208 (a) = 0
208 (b) = 700
208 (c) = 700

Yeah that looks right.