Cessation of trade illustration
In this illustration, you'll learn how capital allowances work when a business ceases to trade—a crucial scenario for the Taxation paper.
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In this lesson
- 0:00 Capital allowances on cessation explained
- 0:41 Disposal proceeds limited to cost rule
- 1:15 Balancing allowance when ceasing to trade
- 2:05 Balancing charge on excess disposal proceeds
- 3:26 Balancing allowance vs balancing charge summary
About this lesson
The session walks through two practical examples with Shona, showing how to calculate the tax written down value of asset pools, handle disposals, and understand the key difference between balancing allowances and balancing charges. You'll see why disposal proceeds are always limited to cost, and how the cessation year triggers either a balancing allowance (if you've claimed too few allowances) or a balancing charge (if you've claimed too many). By the end, you'll be confident applying these rules to any cessation scenario in your exam.
Duration: 4m
Transcript
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