capital allowances on reducing balances with scrap in final year, can anyone help?

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    jrow
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    • Topics: 27
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    Hi all,

    can anybody help firstly understand the reducing balance for depreciation and then how to treat it for Capital allowances?

    much appreciated


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    carl29
    Participant
    • Topics: 9
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    Reducing balance applies an annual rate to amount of Depreciation to be applied, ie if you had a capital sum of 100k, and depreciated using the reducing balance method at a rate of 25% per annum, year one you would depreciate by 25k, year 2 18.75k (25% of 100k-25k), year 3 14.06k (25% of 100k-25k-18.75k) and so on.

    For capital allowance purposes, it’s the same principal, except the reducing balance is used as tax relief

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