A Balancing Allowance or Balancing Charge arises when a business sells or disposes of an asset for more or less than its remaining tax value, adjusting the capital allowances already claimed.
Allowance versus charge
If the sale proceeds are less than the pool's remaining tax value, a balancing allowance gives extra tax relief. If proceeds exceed the remaining value, a balancing charge adds the difference back as taxable profit, most often seen when a main pool is closed down.
Tax rules depend on individual circumstances and can change. This glossary is general information rather than personalised tax advice.