BTX - dont understand balancing charges? Also private use..

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topcat
topcat Registered Posts: 452
in AAT Level 4 (Level 8 in Scotland)
Hello all,

Why is there a balancing charge of -£4500 after the disposal of the car i just dont understand why?

Also why is private use taken into consideration on the car? (private use 20%) i am sure i have had a question which stated you do not take into consideration private use when calculating capital allowances?

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  • Nps
    Nps Registered Posts: 782
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    The asset has been written down to 14,500. It has now been sold for £10,000 so there is £4500 remaining that the company has not received tax relief on (essentially this is a £4500 loss on disposal). This is dealt with by way of a balancing charge which ensures all 'usage' of the asset received capital allowances, so the company will receive tax relief on that £4500. As only 80% of the asset is used for business use, the company only receives 80% of the tax relief.
  • Nps
    Nps Registered Posts: 782
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    HMRC guidance says that if the car is for an employee as part of a remuneration package, it is all classed as business use but if it is a partner or someone self employed that uses it, personal use vs business use must be calculated. http://www.hmrc.gov.uk/capital-allowances/plant.htm#7
  • topcat
    topcat Registered Posts: 452
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    Nps wrote: »
    HMRC guidance says that if the car is for an employee as part of a remuneration package, it is all classed as business use but if it is a partner or someone self employed that uses it, personal use vs business use must be calculated. http://www.hmrc.gov.uk/capital-allowances/plant.htm#7

    Nps your an absolute diamond thank you so much :001_smile: thought we had lost you as well!

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