Depreciation charged in the accounts is not generally an allowable deduction for tax purposes. Instead, tax depreciation is given through a system known as capital allowances.
The rate of capital allowances for plant and machinery is 12.5% for a period of eight years.
The availability of wear and tear allowances, and the amount of such allowances on business cars, is linked to the CO2 emissions of a car.
Industrial buildings are written down at the rate of 4% per annum over the tax life of the building.
A balancing allowance or charge arises on the disposal of an asset on which capital allowances have been claimed. This represents the difference between the disposal proceeds of the asset and its tax written down value.