Capital Allowances Act 2001 section 360P

Calculation of balancing adjustments

Section 360P explains how to calculate balancing allowances and balancing charges when a balancing event occurs in relation to qualifying expenditure.

• A balancing allowance arises where there are no proceeds from the balancing event, or where the proceeds are less than the remaining qualifying expenditure — the allowance equals the full residue or the shortfall respectively
• A balancing charge arises where the proceeds from the balancing event exceed the residue of qualifying expenditure immediately before the event
• The balancing charge equals the excess of proceeds over the residue, or the full proceeds if the residue has already been reduced to nil
• The balancing charge is capped at the total of any initial allowances and writing-down allowances previously given to that person in respect of the same expenditure