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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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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
2009/10      
  £ £ £  
  Residual value b/f 80 50 72
  Disposal value at 30.11.2001 (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).