Hi there,
I seem to have difficulties understanding how the balancing charge/allowance work. I was told by my tutor that there's balancing allowance/charge when all assets in the pool have been sold for either more or less that the pool value. However I was also told that there isn't a balancing charge/allowance for assets that were already pooled. But I am sure I did see a balancing allowance in one of the past exam papers (and not the one where the value was less than £1,000), and really confused me!! Please help!
Thanks
Atty Lazarova
Ask the Tutor ACCA TX-UK
Balancing allowance/charge
Could it be that the question where you saw balancing allowance on general pool was company's final year of trading with no AIA and WDA's just balancing charges and allowances ?
Hello ,
i just went through the question starfish ltd december 2011 ( bpp revision kitQ41) in which a balancing charge and allowance arises as the company ceased trading in respective year
1.so no AIA and WDA when the business winds up instead we have balancing charge and balancing allowances available
2.moreover in situation where TWDV plus additions less disposals during the accounting period on the main pool and special rate pool is less than £1000 then business will claim a small balance relief so no WDA
hope that helps!!
Regards
A balancing allowance will only arise on a pool on cessation of trading. A balancing charge may arise at any time when the sale proceeds of disposals from the pool exceed the tax wdv in that pool. The disposal of a non pool asset will give rise to either a balancing allowance or charge. When sale proceeds leave a pool balance at less than 1,000 then a small pools WDA claim may be made
could it also include disposals in special rate pool or just a short life asset or an asset used for owners personal use?
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