Section 731 — Corporation Tax Act 2009: Writing down at fixed rate: calculation

Writing down at fixed rate: calculation 731 1 If an election is made under section 730 for writing down at a fixed rate, a debit equal to the lesser of—

a 4% of the cost of the asset, and b the balance of the tax written-down value, must 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 subsection (1)(a) must be proportionately reduced.

3 In this section “ the cost of the asset ” means the cost recognised for tax purposes.

4 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 Subsection (4) is subject to any adjustments required by this Part or Part 4 of TIOPA 2010 (provision not at arm's length).

6 If there is a part realisation of the asset (see section 734(4)), the reference in subsection (1)(a) to the cost of the asset must be read as a reference to the sum of—

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 recognised for tax purposes of any subsequent expenditure on the asset that is capitalised for accounting purposes.

7 If there is a further part realisation, subsection (6) applies again.