Commentary on Sections Glossary History Section 487: Writing-down allowances
1738.This section is based on section 134(1) of CAA 1990. It deals with writing-down allowances. Unlike CAA 1990 this Act makes explicit how writing-down allowances work.
1739.Subsections (1) and (2) deal with the writing-down period (25 years) and the consequent amount of allowance (4% a year).
1740.If expenditure was incurred before 6 November 1962 then the writing-down allowance is 2% and the period 50 years. See paragraphs 103 and 105 of Schedule 3.
1741.Subsections (4) and (5) deal with chargeable periods longer or shorter than a year and confirm that total allowances cannot exceed expenditure.
1742.Subsection (6) makes it explicit that the allowance can be reduced to a specified amount. This is a change. See Change 38 in Annex 1.
1743.Subsection (7) prevents a writing-down allowance in the same chargeable period as a balancing allowance. CAA 1990 allows a writing-down allowance for the chargeable period of a balancing allowance but this simply means that the amount of the balancing allowance is reduced by the amount of the writing-down allowance in that chargeable period. So this is not a change. See Note 64 in Annex 2.