Capital allowance balancing allowance (UK)
A balancing allowance is a deduction for a qualifying remaining capital-allowance pool balance when the law permits it, such as on a single-asset pool disposal or closure of a main or special-rate pool on cessation. It is distinct from a balancing charge, which can increase taxable profit. Disposal value, private use, special first-year allowances and other applicable rules must be considered.
Worked example
On cessation, assume a qualifying main pool has a £2,000 remaining balance after all relevant disposal values and no special adjustment applies. The trader may claim a £2,000 balancing allowance.
Common mistake
Claiming a balancing allowance on every disposal from a continuing main pool, or confusing it with a balancing charge.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |