A balancing charge can arise under several of the capital allowance codes when an asset is disposed of or the business comes to an end.
The rules for balancing charges differ between the various codes of allowances, and no balancing charges can arise under the structures and buildings code. A charge is treated as a receipt of the business in computing taxable profits.
Under the plant and machinery code, a balancing charge arises where there is an excess of disposal values allocated to a pool over the available qualifying expenditure in the pool. A disposal value has to be brought into account where a person who has incurred qualfying expenditure on an item of plant or machinery ceases to own it or loses possession of it, or where the plant or machinery is destroyed or otherwise ceases to exits or when the business comes to an end. The disposal value is allocated to the pool to which the expenditure was allocated (or would have been allocated if a first-year or annual investment allowance had not been given).