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I am a bit confused with the balancing adjustment and WDA.
While doing the examples from the lecture notes, the Balancing Allowance ( Sales proceeds < WDV) figure is placed under the allowances column for example, example 6 in the lecture notes when the car with private use was sold. (the business use portion)
However for EXAMPLE 16 from the Finance Act.
Ling prepares accounts to 31 March. On 1 April 2021, the tax written down value of plant and machinery in her main pool is £16,700…….. the $1,800.00 was not brought to the Allowances column when the car in the special rate pool was sold, but rather WDA 6% was taken on it.
Can you explain this for me please, why they are treated differently.
The car is in the Special Rate POOL – there is NO balancing allowance when a pool asset is sold – this is the the point about pool assets!
If the car had private use by the proprietor then it would not be in a pool and thus the balancing adjustment would arise whenever it was sold.
Thank you sir. Understood.