Chapter 12 - Cars & Other Assets

Question 1

Cars Definitions

Answer 1

Lorries, vans, trucks and whatnot aren’t cars. They are treated as normal bits of P&M.

Question 2

Cars - FYA

Answer 2

New and unused cars with emissions of 50g/km or lower qualify for 100% FYA

Question 3

Cars - Gen Pool

Answer 3

Cars with emissions of between 51g/km and 110g/km are put in the main pool and written down at 18%

Question 4

Cars - SRP

Answer 4

Cars with emissions exceeding 110g/km are put in the SRP and written down at 8%

Question 5

Cars - AIA

Answer 5

Cars don’t qualify for AIA

Question 6

Private Use Adjustments

Answer 6

Is a trader or partner uses an asset privately, an adjustment needs to be made to ensure only the business element gets CAs. Private use assets are kept in their own column.

Question 7

Balancing Allowances and Charges

Answer 7

Balancing adjustments apply when assets in their own pool are sold. When an asset in its own pool is sold, the disposal proceeds are deducted from the pool. The proceeds are limited to original cost. The proceeds deducted from the pool will either exceed t or be less than the tax WDV

Question 8

Proceeds Exceed Tax WDV

Answer 8

A balancing charge arises where the proceeds exceed the tax WDV, the balancing charge is a negative capital allowance

Question 9

Proceeds Are Less than Tax WDV

Answer 9

A balancing adjustment arises where the proceeds are less than the tax WDV, the adjustment is a positive capital allowance

Question 10

Short Life Assets

Answer 10

SLA have a predicted useful life of less than 8 years. Computer equipment is a good example.

Question 11

SLA Exclusions

Answer 11

Cars, ships, long life assets, assets with partial non-business use and expenditure in the SRP cannot be classed as SLAs

Question 12

Depooling

Answer 12

A business can depool an asset ie deal with the asset separately from the pools. This gives the asset its own column.

Question 13

SLA Cont.

Answer 13

Sale of a SLA gives rise to a balancing adjustment/charge

Question 14

Cessation of a Business

Answer 14

When a business closes, the various CA columns must shut down. As they are shutting down, no WDV can be carried forward, instead balancing adjustments arise in each pool. No WDA, FYAs or AIAs are given in year of cessation

Question 15

Balancing Adjustments - Gen Pool & SRP

Answer 15

A balancing allowance will only ever arise in the gen pool and SRP on cessation of trade.
A balancing charge can can arise in the GP and SRP while trade continues, this happens if a plant is sold in the year and the disposal exceeds the tax WDV