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Post Info TOPIC: How to take account of Capital allowances BFWD against asset Disposal (Loss)
DJL


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How to take account of Capital allowances BFWD against asset Disposal (Loss)
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Hi all, I'm a bookkeeper/accounts manager for an SME for my full time job, worked in an accountancy practise but that was over 4 years ago and have forgot the correct procedure for capital allowances and Asset disposals. (currently doing my partners accounts and tax return).

His year end is February. He suffered a fire to his workshop in May (which damaged everything) - No insurance due to complications on the building.
His van and fibreglass moulds have a BFWD NBV of £1133 (£3500 -2367 DEPN).
His WDV BFWD is £3500 due to CA not being taken in previous years because of low profits.
 
(£3500) Assets
£2367   DEPN
£1133   Fixed Asset Disposal - therefore a loss

Q1/  Do the CA's need to be adjusted so that the CFWD are £0?
Q2/  If so then £3500 to disposals in CA, but how much for Balancing allowance? £3500 or £1133??

Q3/  On the spreadsheet tax calc that I'm using the Loss from the asset disposal is being added/disallowed for personal tax purposes, is this correct?


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gbm


Guru

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Posts: 896
Date:
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Hi Dawn,

In respect of the accounts, the loss is £1,133. This gets added back for the tax comp.

However, in terms of capital allowances, even though he no longer has the assets, he has to write down @ 20%:

£3,500 x 20% = £700.

This is because it would (presumably) have been 'pooled', in which case it may have been included with other assets and therefore not separate.

As far as I'm aware, the only time he'd be able to take the balance of the capital allowances would be if he stopped trading.

I could be wrong on this, but this is how I would do things.

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Regards,
Nick

Website: www.gbmaccounts.co.uk
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