Capital allowances

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meibaker
meibaker Registered Posts: 481 Dedicated contributor 🦉
Hi, how to work out this capital allowance, for example, wdv for main pool £4,000, disposal of some equipment for £1.000 (original cost of £1,500) how to work out the capital allownace then??!!

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  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    WDV £4000

    Less disposals £1000

    WDV £3000

    WDA 20% = ££600

    WDV c/f £2400
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    I have a quick one say you B/F balance was 4000 and you disposed of all of it for 1000 do you still get the capital allowances but then just write off the rest?
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    If it's all in the general pool, then you just add back the proceeds on disposal (up to value of original cost - never exceeding it - balance is capital gains) and carry on as normal.

    In Meibaker's example, the £500 difference between purchase and selling price is written down against tax via the normal rules.

    A-Vic, in your example, the pool value is still £3000 and has to be written down year on year, until the balance falls below £1000, and then you can write all of this off at once.
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Great Thanks :)
  • meibaker
    meibaker Registered Posts: 481 Dedicated contributor 🦉
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    thanks for your reply, so what happen if the diposal equipment is £1000, but original cost is 500?
  • SLM
    SLM Registered Posts: 64 Regular contributor ⭐
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    As far as I am aware but I could be wrong original cost does not matter it is the disposal proceeds you include/or market value. Somebody let me know if I am wrong...probably am...
  • meibaker
    meibaker Registered Posts: 481 Dedicated contributor 🦉
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    SLM wrote: »
    As far as I am aware but I could be wrong original cost does not matter it is the disposal proceeds you include/or market value. Somebody let me know if I am wrong...probably am...

    thanks SLM,i can remember reading something like this on my book
  • *Jo
    *Jo Registered Posts: 509 Epic contributor 🐘
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    I think from memory that the original cost does not matter unless the item is in an individual pool. If the item has been "pooled" then you would not have a balancing charge/allowance on disposal.

    If the item was in an individual pool say an expensive car then you would put in a balancing charge/allowance to bring that account back down to zero.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    Monsoon is correct, if you make a disposal which results in a profit then the maximum amount deducted from the pool is the original value.

    As copied from HMRC website:

    'If you’ve disposed of any plant and machinery assets, deduct the disposal value (usually, this is how much you sold the asset for) from the appropriate pool. But for each asset, the amount you can deduct from the pool is limited to a maximum value - the value of the asset when it was added to the pool.'
  • snookerfan
    snookerfan Registered Posts: 2 New contributor 🐸
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    can anyone help me ???
    i've just done the capital allowance in June 09 practice paper and annual investment allowance is before written down allowance but in the Business tax june 2010 exam obsourne book i've learn from it has the annual investment allowance after written down allowance.
    Is it just because in the book you are now allowed to claim First year allowance at 40% on annual investment allowance over £50000 and at the time of the June 09 this wasn't done ???
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    If you look at the paper when was the asset bought? FYA of 40% is only allowed on assets bought after the 1st of April 2009
  • snookerfan
    snookerfan Registered Posts: 2 New contributor 🐸
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    ah yeah there both before 1st of April thanks very much A-vic !!
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