Capital Allowances Act 2001 section 59B

Disposal of assets where first-year allowance made under section 45S for expenditure which is special rate expenditure

Section 59B deals with the balancing charge that arises when a company disposes of an asset for which it previously claimed a first-year allowance under section 45S, where the expenditure was special rate expenditure.

• When a company disposes of plant or machinery that benefited from a section 45S first-year allowance on special rate expenditure, a balancing charge arises in the accounting period of disposal
• The balancing charge is a proportion of the disposal value, calculated by dividing the original allowance expenditure by two, then dividing the result by total expenditure that has been subject to first-year allowances or allocated to a pool
• This balancing charge applies regardless of whether the company is also liable to any other balancing charge for the same period
• The total disposal receipts (TDR) for the relevant pool are reduced by the amount of the balancing charge, preventing double counting