Max size of balancing allowance on single-asset pool ??

Max size of balancing allowance on single-asset...

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My question is regarding HMRC capital allowances on a sole-trader's car with mixed business/personal use. The car has high CO2 emissions (ie, > 160g/km).

So far, I believe it can be treated as follows:

 - added to a single-asset pool (because of mixe use)

 - pool uses 10% write-down (due to high CO2 emisssions level)

 - there is no other restriction of size of annual write-down (in particular, it can be >£3000)

 - disposal of car creates a balancing event (because it's in a single asset pool)

Assuming above is correct, my quesiton:

 - Is there any limit on the size of the balancing allowance that might arise on disposal? It seems that for an expensive car written-down at only 10%/year the balancing allowance could be quite significant? So far, I've found  nothing in the HMRC manuals to limit this.

Thanks for any help.

Replies (5)

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By PennyC
25th May 2011 22:24

No limit

Well, not exactly - the balancing allowance is restricted to the residue in the pool.

It's no different to the days of writing down an £80k car at £3k per year - usually resulting in significant balancing allowances on disposal.

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By edfred
25th May 2011 23:53

No limit...

Thanks for your reply...

Can I give an example, just so I'm clear what you mean:

High emission car bought in, say, may2009 for £40,000 and then sold in may 2011 for, say, £25,000.

With accounts made up to 5 apr, might be treated as follows:

             pool value     allowance     value to c/f

09/10:  40,000             4,000           36,000                      ie, 10% write down

10/11:  36,000             3,600           32,400                      ie, 10% write down

11/12:  25,000 (sold)      11,000 (balancing allowance)   

 

Is that consistent with what you said?

thanks again

 

 

 

 

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By Caractacus Potts
26th May 2011 05:52

Capital Allowances

Hi

Surely the calculation is 32400-25000=7400 balancing allowance?

 

 

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By cathygrimmer
26th May 2011 09:16

Personal use

Don't forget the non-business use restriction - you said it was mixed business/private.

Cathy

[email protected]

 

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By david5541
03rd Jun 2011 10:19

PRIVATE USE ON BALANCING ALLOWANCE

hI cATHY

SO IS THE BALANCING ALLOWANCE OF 7400 ALSO RESTRICTED FOR P.USE? OR ONLY THE wda?

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