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Balancing Charge

[ˈbælənsɪŋ ʧɑːʤ]



A Balancing Charge is a HMRC tool that prevents excessive tax relief claims. It can be seen as the opposite of a Capital Allowance.

More detail:

A Balancing Charge is a tool used by HMRC to ensure you don't claim too much tax relief on an item you buy for your business. It is designed to address any gain in value that the asset may have experienced while it was being used for business purposes.

It is calculated by subtracting the cost of the asset (or the amount that has already been deducted through capital allowances) from the sale price or market value of the asset at the time of disposal. If the result is a positive number, this represents the taxable gain, and it is added to your profits on your tax return.

It can be seen as the opposite of a Capital Allowance.

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