Capital Gain On Sale Of Asset - Online Bookkeeping Services

Suppose you bought a computer (item of plant and machinery) in June 2025 for £2,000.

In December 2027, your company sold the computer for £500. You claimed Annual Investment Allowance (AIA) for purchase price of £2,000.

Let's check how Online Bookkeeping Services could help calculate the capital gain or loss:

When the computer is sold in December 2027, you would deduct £500 in the main pool of your capital allowances (lower of cost and sales receipts) reducing your capital allowances.

But if your only asset is the computer, then you will have a balancing charge of £500 added to your trading income.

Your capital gains computation is as follows:

When selling the asset for tax purposes (£500 receipts less £2000 cost), the cost allowable as a deduction is reduced by the net capital allowances given, in this case AIA £2,000 less balancing charge of £500 = £1500

Your net cost allowable to calculate the capital gain or loss is £2,000 less £1,500 = £500