Capital Allowances Act 2001 section 442

Balancing charges

Section 442 deals with how balancing charges arise when a person who has received a capital allowance for research and development expenditure later disposes of the asset concerned.

• A balancing charge arises where a disposal value must be brought into account in a chargeable period after the one in which the original allowance was made
• The balancing charge is the amount by which the disposal value exceeds any unclaimed allowance, but is capped at the total allowance previously made for that expenditure
• An "unclaimed allowance" is any part of the allowance the person was entitled to but chose not to claim
• The balancing charge calculation may be affected by additional VAT rebates arising in earlier chargeable periods, as set out in section 449