Capital Allowances Act 2001 section 472

Amount of allowances and charges

Section 472 sets out how to calculate the amount of writing-down allowances, balancing allowances and balancing charges for know-how expenditure.

• The writing-down allowance is 25% per year of the excess of available qualifying expenditure (AQE) over total disposal receipts (TDR), adjusted proportionately if the chargeable period is longer or shorter than a year
• Where the expenditure relates to a trade that has only been carried on for part of the chargeable period, the allowance is further reduced proportionately
• A person may choose to claim less than the full writing-down allowance by specifying a reduced amount
• A balancing charge arises when TDR exceeds AQE, while a balancing allowance arises in the final chargeable period when AQE exceeds TDR