EIM36930 - Deductions from earnings: capital allowances: example: balancing allowances and charges

This example shows how balancing adjustments are calculated (see EIM36680).

A salesman working from home ceases employment on 30 November 2009. Capital allowances had previously been claimed on the following items:

• an electric typewriter with a residual value brought forward at 6 April 2009 of £80. On cessation of employment the typewriter was sold for £100, which is less than its original cost.
• an answering machine with a residual value brought forward at 6 April 2009 of £50. The salesman retains the machine for private use. Its market value at cessation was £20.
• an overhead projector with a residual value brought forward at 6 April 2009 of £72. The projector was bought in the previous year for £120, but on cessation the taxpayer manages to sell it for £130.

Both the typewriter and the answering machine were used 10 per cent for private purposes, but the projector was used wholly for business.

The balancing adjustments required are as follows:

1. gives rise to a balancing charge of £18 (£20 as above, less 10% private use)
2. gives rise to a balancing allowance of £27 (£30 as above, less 10% private use)
3. gives rise to balancing charge of £48 (although the difference above is £58, the charge is restricted by the amount that the disposal value exceeded the original cost - see EIM36680).