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Capital Allowance – Balancing Adjustment /WDA

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Capital Allowance – Balancing Adjustment /WDA

  • This topic has 2 replies, 2 voices, and was last updated 6 months ago by DesWil91.
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  • July 14, 2022 at 12:33 am #660436
    DesWil91
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    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.

    Thank you.

    July 18, 2022 at 1:02 pm #661137
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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.

    July 22, 2022 at 2:38 am #661607
    DesWil91
    Participant
    • Topics: 2
    • Replies: 2
    • ☆

    Thank you sir. Understood.

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