Tx notes fa22 Final

Calculate the balancing adjustment for the year ended 31 December 2022 

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(b)
A Balancing allowance can only occur on the main pool and special rate pool on cessation of 
the trade.
(c)
No AIA, WDA or FYA are available in the final accounting period of the business.
 
Example 5 
Kris prepares accounts to 31 December.
Kris ceased to trade on 31 March 2023 on which date all plant and machinery was sold for £5,000.
The WDV on the main pool as at 1 January 2023 was £12,000.
Machinery was purchased on 1 February 2023 for £4,000
Calculate the balancing adjustment for the accounting period ended 31 March 2023 
6. Preparing the Capital Allowance Computation 
It is essential to follow a set format in dealing with the additions and disposals of assets in the 
accounting period in the preparation of the capital allowance computation for plant and machinery:
1.
List any tax written down values (unrelieved expenditure) on the pools and any non-pool assets 
at the start of the accounting period as given within the question.
2.
List expenditure qualifying for AIA, in order, firstly special rate pool and then main pool.
3.
Add any expenditure in excess of the AIA limit to the relevant pool.
4.
Add to relevant pool (main or special rate) the cost of any cars qualifying for WDA ie cars with 
CO2 emissions.
5.
Deduct sale proceeds, to a maximum of original cost, of assets sold during the accounting 
period from the relevant pool balance.
6.
Deduct sale proceeds, to a maximum of original cost from the tax WDV of any non-pool assets 
and compute the relevant balancing adjustment.
7.
Compute available WDA’s on the TWDV’s computed and deduct therefrom.
8.
List any new electric zero emission cars purchased during the accounting period and claim the 
available 100% FYA.

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