Capital Allowance

This topic has 3 replies, 3 voices, and was last updated 5 years ago by Tax Tutor.

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January 19, 2021 at 7:47 am #607103
vickyxxi
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Question:

Joe has been in business for many years preparing accounts to 5 April each year. The tax written down value of his main pool at 6 April 2019 was £12,000. Joe sold machinery on 10 June 2019 for £11,900 which had originally cost £11,600. He made no acquisitions during the year ended 5 April 2020. What is the maximum capital allowance that Joe can claim for the period of account to 5 April 2020?

The answer is £400 and the working is taking the TWDV b/f £12,000 minus the disposal (limit to cost) £11,600. Why is the disposal is limit to cost? Isn’t is supposed to minus the proceeds which is £11,900?
January 20, 2021 at 1:22 pm #607288
Burningdesire
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You take the lower off the disposal proceeds or original cost when it comes to disposal mate
January 20, 2021 at 1:47 pm #607290
vickyxxi
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I see. I got it now. Thank you so much.
January 21, 2021 at 11:05 am #607424
Tax Tutor
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Re original question – this issue is clearly dealt with in the study notes and lectures – please make sure you have worked through the lectures and notes before attempting questions so that you have the best opportunity of success!
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