Capital Allowances Act 2001 section 59A

Disposal of assets where first-year allowance made under section 45S for expenditure which is not special rate expenditure

Section 59A deals with what happens when a company disposes of plant or machinery on which it previously claimed a full expensing first-year allowance under section 45S, where the expenditure was not special rate expenditure.

• When a company disposes of an asset on which it claimed a section 45S first-year allowance (not 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 expenditure that received the first-year allowance by the total expenditure that has received any first-year allowance or been allocated to a pool
• This balancing charge applies in addition to any other balancing charge that may arise for the same period
• The total disposal receipts (TDR) for the pool to which the original expenditure was allocated are reduced by the amount of the balancing charge, preventing double counting