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Where Taxpayers and Advisers Meet

Cessation Of Business ( Tax Clawback )

Joined:Sat Jan 19, 2019 12:06 pm
Cessation Of Business ( Tax Clawback )

Postby GANDONAS22 » Sat Feb 20, 2021 12:53 pm

Partnership selling Guest House in 2021/22 tax year will have a remaining capital allowance pool and hence available allowance of circa £25,000 , Ive read this can be offset against tax liability on cessation, so the question is , please

Will the (estimated) 20/21 tax bill of £7,500 be wiped out by the available allowance if the property is sold in the new tax year 21/22 ?

Hope someone can help ?

Many Thanks


Joined:Sat Feb 01, 2014 3:26 pm

Re: Cessation Of Business ( Tax Clawback )

Postby bd6759 » Sat Feb 20, 2021 5:39 pm

It might. But it might not. It depends on the figures.

If the guest house is being sold, so, presumably, are the assets upon which you are claiming capital allowances.

You do not get a writing down down allowance in the final period. Instead you get a balancing allowance or a balancing charge. The starting point for this is the written down value of the pool.

The amount of the sale price you receive for those assets is deducted from the asset pool. If this gives a positive figure, that amount is a balancing allowance and deducted from the net profits in the same way as a writing down is. This deduction may create, or increase, a loss. Terminal losses can be carried back to previous periods.

If the figure is negative, it is a balancing charge and is added to the net profit. This either creates more profit or reduces the available loss.

Joined:Sat Jan 19, 2019 12:06 pm

Re: Cessation Of Business ( Tax Clawback )

Postby GANDONAS22 » Sun Feb 21, 2021 12:56 pm

Thats very kind , so its probably best I consider the expected outcome of our s198 election and look at the remaining pool values and make a calculation from there ?

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