Capital Allowances Act 2001 section 393P

Calculation of balancing adjustments

Section 393P sets out how to calculate the amount of a balancing adjustment — either a balancing allowance or a balancing charge — when a mineral extraction allowance event triggers such an adjustment.

• A balancing allowance arises when the residue of qualifying expenditure exceeds the proceeds from the balancing event, giving the person a further tax deduction equal to the difference.
• A balancing charge arises when the proceeds from the balancing event exceed the residue of qualifying expenditure, bringing the excess back into charge to tax.
• The residue of qualifying expenditure is the original qualifying expenditure less all mineral extraction allowances previously made in respect of that expenditure.
• The calculation was amended by Finance Act 2012, Schedule 39, paragraph 37, to align with wider reforms to the capital allowances regime.