Capital Allowances Act 2001 section 457

Determination of entitlement or liability

Section 457 explains how to determine whether a person is entitled to a writing-down allowance or balancing allowance, or is liable to a balancing charge, for a given chargeable period.

• Entitlement to allowances or liability to charges is worked out separately for each pool of qualifying expenditure, by comparing available qualifying expenditure (AQE) against total disposal values (TDV).
• Where AQE exceeds TDV, the person is entitled to a writing-down allowance (or, in the final period, a balancing allowance).
• Where TDV exceeds AQE, the person is liable to a balancing charge.
• The final chargeable period — when a balancing allowance rather than a writing-down allowance arises — is the period in which the trade is permanently discontinued.