Capital Allowances Act 2001 section 73

Limit on disposal values

Section 73 sets out how the general disposal value cap is applied when computer software (or the right to use computer software) has already generated earlier disposal values under the partial depreciation rules.

• The section applies whenever a person must bring a disposal value into account for computer software or the right to use or deal with computer software.
• When testing whether the disposal value exceeds the general cap (the amount originally qualifying for allowances), any earlier disposal values already recognised for the same software under the partial depreciation provisions are added to the current disposal value.
• If the combined total exceeds the cap, the current disposal value is reduced so that the cap is not breached.
• This prevents the total of all disposal values recognised over the life of the software from exceeding the expenditure that originally qualified for capital allowances.