Car purchased and written off in same tax year

jilt

I have a client who purchased a car in June 09 and wrote it off in Dec 09. She paid £4000 for it and received £2800 from the insurance company.

My brain has ceased and I'd be grateful if someone could clarify the following.

There are no capital allowances to claim, but I can include the £1200 as a loss on sale of assets in the P & L account. But I can claim the 20% WDA on the new car she bought in Dec 09

Roll on February!

PGM

Won't you treat it the same as a disposal?

So a balancing allowance on sale of £1200.

jilt

PGM wrote: »

Won't you treat it the same as a disposal?

So a balancing allowance on sale of £1200.

This is the first time I've encountered this and wondered if I couldn't do that as no capital allowances have ever been claimed on it before as bought it in the same tax year it was written off.

PGM

jilt wrote: »

This is the first time I've encountered this and wondered if I couldn't do that as no capital allowances have ever been claimed on it before as bought it in the same tax year it was written off.

Its the only way I can see to do it, as you don't claim capital allowances in the year of disposal.

jilt

So even if no allowances have previously been claimed you can claim a balancing allowance, thanks PGM, for some reason I thought you could only claim a balancing allowance if you'd already claimed some sort of allowance on that asset before.

Sounds really stupid now cos if it was a balancing charge you'd have to pay it as you'd have made a profit on the sale. My defence is it's been a very very busy January!