Capital Allowances

This article explains how Capital Allowances are calculated within the accounts.


The tax written down value is the price paid less the capital allowances whereas the written down book value is the price paid less depreciation. 

You can use any depreciation rate you like for an asset but the HMRC prescribes specific capital allowance percentages.

Try this example (entering it into the Year End 2012 accounts):

A machine was bought in 10th April 2010 for £1000 and has deprecated by £100 before the April 2011. It continues to depreciate at 10% per year. The written down value on 6th April 2011 is £900 (matching the depreciation)


  1. B14: 10/04/2010
  2. V14: A Machine
  3. E14: 1000
  4. F10: 100
  5. O14: 900

A written down value of £720 is calculated for the end of 2012,

Columns W through Z remain blank.

The machine is sold on the 1st August 2012 for £500.


  1. U14: 01/08/2010
  2. V14: 500  

As soon as the 500 is entered columns W through Z, including Y are calculated.

Selling below the written down value is a loss bringing in more to claim for a Capital Allowance £220 in this case.











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