Capital Allowances Act 2001 section 320

Overall limit on balancing charge

Section 320 limits the amount of a balancing charge that can be made on a person, ensuring it does not exceed the total net allowances previously claimed.

• A balancing charge cannot exceed the total net allowances a person has received
• Net allowances represent the cumulative tax relief previously obtained through capital allowances
• This cap prevents a person from being taxed more heavily on disposal than the benefit they originally received
• The rule ensures fairness by matching any clawback of relief to the actual relief given