balancing allowance : insu
ffi
cient allowances have been claimed over the lifetime of the asset
and can now be claimed.
๏
balancing charge : too many allowances have been claimed These excess allowances will be
recovered and charged to tax by means of a balancing charge (BC), which reduces the capital
allowances claim for the period.
The Small Pools WDA Where the TWDV of either the main pool or special rate pool prior to calculating the WDA is less than
£1,000, the entire balance may be taken as a WDA in that period. The £1,000 is prorated if the
accounting period is other than 12 months.
Example 1 Beth prepares accounts to 5 April. The WDV as at 6 April 2022 of her main pool is £1,250. She
purchases machinery for £10,000 in the year and sells an item of plant for £500 (cost £3,000).
Calculate her capital allowances for the year ended 5 April 2023 5. Non-Pool Assets In the following circumstances, assets will not go to either the main or special rate pools but will
instead have their own separate column on the capital allowance computation:
(1) Assets with private use by the business owner, or
(2) Short life assets on which the taxpayer has made a depooling election.
5.1. Private use of an asset by the owner of the business Where an asset is used by the
owner of the business (this can be either a sole trader or a partner in
a partnership) partly for business and partly for private purposes (typically a motor car), only the
business proportion of the available capital allowances is given.
The following rules must be followed when computing capital allowances:
(a)
The cost is not brought into the main or special rate pool, but must be the subject of a
separate column on the computation.
(b)
The WDA (or AIA or FYA) of the asset is calculated on its full cost but only the business
proportion of any allowance is actually given.
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