Capital Allowances Act 2001 section 385

Calculation of balancing adjustment

Section 385 explains how to calculate a balancing adjustment — either a balancing allowance or a balancing charge — when a balancing event occurs in relation to mineral extraction allowances.

• A balancing allowance arises where there are no proceeds from the balancing event, or where the proceeds are less than the residue of qualifying expenditure immediately before the event.
• The balancing allowance equals the full residue if there are no proceeds, or the shortfall of proceeds below the residue if there are some proceeds.
• 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 amount by which the proceeds exceed the residue.