Capital Allowances Act 2001 section 393M

When balancing adjustments are made

Section 393M establishes the circumstances and timing under which balancing adjustments arise in relation to fixtures, determining when a balancing charge or balancing allowance must be calculated.

• A balancing adjustment is triggered when a fixture ceases to be used for the qualifying activity, or when the person's interest in the fixture comes to an end.
• The adjustment is made for the chargeable period in which the relevant event occurs, ensuring it is accounted for in the correct accounting period.
• A balancing charge arises where the disposal value exceeds the tax written-down value, meaning too much relief has been given in earlier periods.
• A balancing allowance arises where the tax written-down value exceeds the disposal value, meaning insufficient relief has been given previously.

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