Sale of Plant and Machinery

Question 1

What happens when plant and machinery is sold in the accounting period?

Answer 1

The lower of sale proceeds and asset’s original cost is deducted from pool

Question 2

What is a balancing allowance?

Answer 2

Insufficient allowances have been claimed over lifetime of asset and can now be claimed

Question 3

What is a balancing charge?

Answer 3

Excess allowances are recovered and charged to tax through balancing charge. Reducing capital allowance claim

Question 4

What happens when TWDV prior to calculating WDA is less than £1,000?

Answer 4

The entire balance may be taken as a WDA in that period

Question 5

When is the £1,000 prorated?

Answer 5

If accounting period is not 12 months