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Good day, I would like to know why in practice question 11 the balancing adjustment was calculated at 8 % to get the allowance. I thought that whatever figure that remained after subtracting the disposal proceeds would go in as an allowance or charge unless there was private usage by the owner. Even so it would only be the private portion that would have been subtracted from the allowance. This car was in the special pool and was for the sales manager.
Why calculate the 8 percent allowance?You have stated above that the car was in the special rate pool (as there is no private use by the proprietor) – therefore there is no balancing adjustment on the sale of the car or any other asset from the pool (unless the proceeds had exceeded the tax wdv of the pool itself, in which case a balancing charge would have arisen as usual – there is never a balancing allowance on a pool until the cessation of trading when either a balancing charge or allowance may arise).
Therefore having deducted the sale proceeds of the car from the special rate pool and a positive balance remains in the pool a normal WDA is then computed.
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