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.
| - | (a) | (b) | (c) |
|---|---|---|---|
| - | Typewriter | Answering machine | Projector |
| 2009 to 2010 | £ | £ | £ |
| Residual value brought forward | 80 | 50 | 72 |
| Disposal value at 30 November 2001 (see EIM36690) | 100 | 20 | 130 |
| Total | (20) | 30 | (58) |
(a) gives rise to a balancing charge of £18 (£20 as above, less 10% private use)
(b) gives rise to a balancing allowance of £27 (£30 as above, less 10% private use)
(c) 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).