If you dispose of or sell an asset on which you’ve claimed super-deduction or special rate first year allowances, you must work out a balancing charge and add this to your taxable profits.
You should check what events are classed as disposals.
You must not deduct the disposal value that is included in the balancing charge from the main rate or special rate pool, as you would with a normal disposal. Find out more about rates and pools.
Work out the balancing charge after the super-deduction has been claimed
To work out the balancing charge:
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Work out the disposal value for the asset.
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Work out the ‘relevant proportion’.
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Multiply the disposal value by the ‘relevant proportion’.
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Multiply this result by the ‘relevant factor’ to get the balancing charge.
The portion of the disposal value not included in the balancing charge should be deducted from the main pool in the normal way.
Work out the ‘relevant proportion’
If you claimed the super-deduction for the full cost of the asset, the ‘relevant proportion’ of the disposal value is the whole of the disposal value.
If you claimed the super-deduction for only part of the cost of the asset, you should first work out the ‘total relevant expenditure.’ This is the total of the expenditure on the asset:
- on which a super-deduction has been claimed (the ‘relevant super-deduction expenditure’)
- which has been added to a capital allowances pool
- on which another first year allowance has been claimed
To get the ‘relevant proportion’, divide the ‘relevant super-deduction expenditure’ by the ‘total relevant expenditure’.
Work out the relevant factor
If the disposal takes place in an accounting period ending before 1 April 2023, the ‘relevant factor’ is 1.3.
If the accounting period begins after 1 April 2023, the ‘relevant factor’ is 1.
If the accounting period includes 1 April 2023, the ‘relevant factor’ is worked out using these steps:
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Count the number of days in the accounting period before 1 April 2023.
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Divide that number by the total number of days in the accounting period.
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Multiply the result by 0.3.
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Add 1 to the result.
Work out the balancing charge after the special rate first year allowance has been claimed
To work out the balancing charge:
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Work out the disposal value for the asset.
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Work out the ‘relevant proportion’ of the disposal value to get the balancing charge.
The portion of the disposal value not included in the balancing charge should be deducted from your special rate pool in the normal way.
Work out the ‘relevant proportion’ of the disposal value
If you’ve claimed the 50% special rate first year allowance for the full cost of the asset, the ‘relevant proportion’ of the disposal value is half of the disposal value.
If you’ve claimed the allowance for only part of the cost, work out the ‘relevant proportion’ by first working out the ‘total relevant expenditure’. This is the total of expenditure on the asset:
- on which the special rate first year allowance has been claimed (the ‘relevant allowance expenditure’)
- which has been added to a capital allowances pool
- on which another first year allowance has been claimed
Divide the ‘relevant allowance expenditure’ by 2. Then, divide this result by the ‘total relevant expenditure’ to get the ‘relevant proportion’.
Then, multiply the disposal value by the ‘relevant proportion’ to get the balancing charge.
