Finance Act 2002

Writing down at fixed rate: calculation

11 (1) Where an election is made for writing down at a fixed rate, a debit equal to—

(a) 4% of the cost of the asset, or

(b) if less, the balance of the tax written down value,

shall be brought into account for tax purposes in each accounting period beginning with that in which the relevant expenditure is incurred.

(2) If the accounting period is less than 12 months, the amount mentioned in sub-paragraph (1)(a) above shall be proportionately reduced.

(3) The cost of the asset means the cost recognised for tax purposes.

(4) Subject to any adjustment required for tax purposes, the cost of the asset recognised for tax purposes is the same as the amount capitalised for accounting purposes in respect of expenditure on the asset.

(5) After a part realisation of the asset the reference in sub-paragraph (1)(a) to the cost of the asset shall be read as a reference to—

(a) the cost recognised for tax purposes in respect of the value of the asset recognised for accounting purposes immediately after the part realisation, and

(b) the cost so recognised of any subsequent expenditure on the asset that is capitalised for accounting purposes.

(6) On a further part realisation, sub-paragraph (5) applies again.