Sorry in advance for the length of this post. I am trying to ensure I treat Balancing Allowances for cars correctly when I close my business later this year. As a sole trader, I have claimed Capital Allowances in separate pools for cars over the years with varying levels of restriction for Business Use ranging from 50% to the current 20%. I changed cars (Range Rovers) last year and have treated as follows (figures not actual).
Traded-in Car 1 for £20,000 against WDV of £30,000 and bought Car 2 costing £65,000 leaving balances of £10,000 and £65,000 which attracted Capital Allowances at 8% (over CO2 limits) of £800 and £5200. I restricted the claims to £160 and £1040 (20% Business Use).
This year (my final year), I intend to treat as follows:
On balances brought forward of £9,200 and £59,800, I will reduce Car 2 to £11,800 (£48,000 value retained by me), reduce for 20% Business use to £1,240 for Car 1 and £2,360 for Car 2 which will be claimed as Balancing Allowances.
Does that seem correct?
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