The question I have is how to treat the disposal of fixed asset for tax purposes.
The client has scrapped his asset (London Taxi) which he purchased for £4,500. In 2012/13 this was depreciated at £900 and the scrap took place in 2013/14.
I have on his financial accounts taken the disposal of £3,600 into the P&L however in submitting his self assessment return I believe that the disposal of £3,600 should not be allowed in calculating his tax liability. However he should get a balancing allowance of £900, can someone clarify that my workings are correct or suggest a more accurate treatment.
Thank you
Replies (10)
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Yes add back the depreciation.
No balancing allowance unless there is private use on the taxi, or unless the business is ceasing.
Allowance is 18% of £900 and carry the balance forward.
Yet again
Insufficient information in the question to allow a decent answer. Assuming that a balancing allowance is available, that is going to be anywhere between £0 and £4,500. Suggestions, anyone?
Tim - I have no idea where you get "allowance is 18% of £900" from. Nor the OP's suggest that there should be a balancing allowance of £900 (though he could be right).
@BKD
I was assuming he purchased last year and didn't claim any allowances so TDWV was 4500.Then sold this year for 3600, difference £900 left in pool.
But you are right about missing info. As Portia mentions if there are no other assets then the whole pool can be written down for £900 allowances.
Sorry, I was just rushing a quick answer while waiting for clients to authorise submission of returns.
Ah I see now
But in my experience there is a difference between "sold" and "scrapped". And the suggestion that the OP has taken a loss on disposal of £3,600 to the P&L indicates to me that there were no proceeds.
Then again, the OP's suggestion that a £900 balancing allowance may be available would tend to indicate proceeds of £3,600.
Either way, something is not right.
But until questioners start to provide useful information the rest of us are just left guessing. (And often wasting our time.)
Client has sold vehicle for 1700 Loss is 1032 in the P& L account
query is how do i show this in the Corp0ration Tax Computation?
.oO How AWeb has improved in 6 years.
Back in 2015, OPs didn't provide enough information to provide an answer. Compare the ocean of facts provided for, presumably, a similar question at 9:58 on 24 November 2021. And how much better answers are without Tim, Portia and BKD to give them.
I agree - luckily I spotted the date on the OP before reading to the end. And several years later, the information to answer the question has not been provided.
And what has depreciation got to do with anything?