Depreciation and Cap Alls on asset bought and disposed in same year

Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
It's Monday morning and I can't get my head round this one :lol:

I'm thinking aloud here, any comments welcome

Sole trader buys laptop for 400. 10 months later he incorporates the business.


I normally run depreciation as full in the year of purchase and none in year of sale
Presumably there is none this period (10 months) but there will be a market value on disposal (10 month old used laptop - probably worth 200 or so?). So it's just a disposals account to be done.

Whether the laptop gets transferred into the Ltd Co depends on any private usage and contrasts with BIK.

Tax allowances

Same as above, presumably its the market value on disposal that drives the capital allowances. If for simplicity its 400 additions, 200 disposals, then the balance of 200 is allowed in full as a capital allowance... the other 200 is disallowed, as either it was received when the sole trader took it on personally, or transferred as the tax WDV to the Ltd Co's pool.

Annoyingly, the 10 month period straddles 2 tax years so that's going to be fun, going to have to remind myself of basis periods (joy)

As my head's rather fuzzy today feel free to agree, disagree or other! :-)
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