Balancing charge

In a simplified investment appraisal, a balancing charge recovers tax allowances where the disposal value exceeds the remaining tax written-down value. The additional cash tax is the charge multiplied by the applicable tax rate, with payment timing observed. Actual legislation may use pooling, proceeds limits and other adjustments; the difference between two figures is not a universal legal formula. Separate the disposal cash receipt from its tax consequence. The term describes a tax adjustment, which is different from the accounting gain or loss on disposal.