What happens when a company sells an asset?
There are special disposal rules that apply to assets that a company has claimed either full expensing or the 50% first-year allowance on.
For fully expensed assets, the company will have to bring in an immediate balancing charge equal to 100% of the disposal value. This means that if the company sold an asset for £10,000 on which they had claimed full expensing, they would be required to increase their taxable profits by £10,000 rather than deducting the proceeds from the capital allowances pool.
For the disposal of an asset on which a company has claimed the 50% first-year allowance, the company will be required to bring in a balancing charge equal to 50% of the disposal value, with the remaining 50% being deducted from the pool.
In this case, a company selling assets on which they had claimed the 50% first-year allowance for £10,000 would be required to increase their taxable profits by £5,000 and deduct £5,000 from the special rate pool.
Talk to us about full expensing.
