294 Machinery or plant used partly for non-trading purposes

This section relates to the application of balancing allowances or charges in cases where machinery or plant has to some extent been used for non-trading purposes (for example, a motor car which has been used partly for business and partly for private purposes).

In such a case the wear and tear allowances which would be allowable if the asset were used exclusively for business purposes are in practice reduced by an appropriate fraction depending on the extent of the private use. In the absence of a special provision in relation to balancing allowances or balancing charges, the “expenditure unallowed” would be the full cost of the asset less the wear and tear deductions actually given. The result would be that on the sale of the asset the person concerned would be entitled to a balancing allowance which would in effect cancel the restrictions made in the wear and tear allowances. Thus, section 294 provides that in such cases the amount of any balancing allowance or charge to be made will be such amount as is just and reasonable having regard to the circumstances of the case and, in particular, the extent of the use of the asset for non-trading purposes.

Relevant Date: Finance Act 2019