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Good evening i am having difficulty understanding the following examples:
Example 2:
Private use total is £4,200. my understanding is that we should get the £4200 and multiply it by 18% then multiply by 70% which relates to the business use.
in the example it is getting the £4,200 total and multiplying it by the 70% B.U only.
Example 3:
why is the SLA x WDA 18%…should there not be a balancing allowance of £3,500, and no WDA?
thanks
In example 2, a non pool asset, the private use car is sold during the period and therefore a balancing adjustment, here a balancing allowance arises (4,200) but is restricted to the business use % (70%). We do not compute a WDA on the residue, the residue is the balancing allowance!
In example 3 there is a normal WDA in the accounting period in which the short life asset is acquired and the balancing allowance arises in the next accounting period when the short life asset is actually sold – you must look at the accounting periods in which the transactions occurred.
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