Hi Everyone,
I have a plant hire client (limited company) who's hit the stops on AIA. Figures are as follows:
Pool b/f £180k, sales £230k. Balancing charge £50k.
Additions yr to 30.9.16 £640k, AIA restricted to £275k.
Question being, does the balancing charge have to appear separately, or can it be deducted from the additions ? Always done the latter before as it's never been an issue as overall tax the same, but with the reduced £200k AIA ceiling there's a potential difference of £10k tax if the BC has to be separate.
Thoughts appreciated, thanks.
Replies (6)
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But your total AQE after AIA is still greater than TDR, so there is no balancing charge for the period. I'm not sure where you get one from. You have AIA and you have WDA on the pool.
The OP is simply asking whether disposal proceeds have to be applied first to the residue b/f, before calculation of AIA (which would indeed result in a balancing charge). But the answer is no, they don't.
You could always have looked at the legislation - it is pretty clear. Although if you tried looking at legislation.gov.uk you'd be forgiven for not seeing the relevant words - they have still to update the text, but the changes were only made 8 years ago.
AIA is a separate item to the pool.
Therefore pool b/fwd, plus additions which do not qualify for AIA, less disposals. gives the value for calculating this years WDA.
i.e. (based on your figures)
180 + 365 - 230 = 315
WDA 315 @ x%
AIA 275 @ 100%
No balancing charge ever arose.