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Capital Allowances Act 2001

Section 56: Amount of allowances and charges

280.This section is based mainly on section 24(2), (3) and (5) of CAA 1990. It decides the amount of any allowance a person is entitled to claim for a pool or the charge for which they are liable.

281.Subsections (1) to (4) deal with writing-down allowances. The amount is generally 25% of the excess of AQE over TDR, adjusted up or down if the chargeable period is more or less than a year and/or the qualifying activity is carried on for less than the whole chargeable period. For the class pool for long-life assets the rate is 6%. For the class pool for overseas leasing it is 10%.

282.Subsection (5) allows a person to claim less than their full entitlement to a writing-down allowance. Section 24(3) expresses this differently. It requires a person to claim the allowance and to require it to be reduced to a specified amount. But the effect is the same.

283.Subsection (6) provides that if TDR is greater than AQE, the balancing charge is the excess: that is TDR-AQE.

284.Subsection (7) provides that if:

  • AQE is greater than TDR; and

  • it is the final chargeable period for a pool,

then the balancing allowance is the excess: that is AQE-TDR.

285.Both a balancing charge and a balancing allowance have the effect, in colloquial terms, of “emptying the pool”.

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