Hi - can someone please confirm the balancing charge on an item that was sold for more than it originally cost, when AIA was claimed originally. Let's say an item was bought for £5000, and 100% AIA was claimed, then the following year the asset was sold for £6000. Would the balancing charge be £6000 or would it be limited to the amount originally claimed i.e. £5000?
Answer as below (from a previous post of mine that I'd forgotten I'd posted!!)
The profit on disposal shown in the accounts would be an adjustment in the tax computation but the balancing charge itself would only be £5000. 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.
