The profit on disposal shown in the accounts would be an adjustment in the tax computation but the balancing charge itself would only be £600. The disposal value in the capital allowances working is normally restricted to original cost, although there is an exception where the asset was purchased from a connected person.
See page 7 of helpsheet 252 for confirmation of this.
-- Edited by Robert Pearce on Wednesday 2nd of May 2012 03:13:44 PM
-- Edited by Robert Pearce on Wednesday 2nd of May 2012 03:14:21 PM
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Hi - I would like to check the balancing charge when an item is sold for more than its original cost and when AIA was claimed. Lets say I purchased an asset in 2011 for £600 and claimed AIA. If I then sold the asset for £700 in 2012 i.e. for more than the original cost would the balancing charge be £700 or would it be limited to the amount originally claimed i.e. £600.
