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Balancing Charge

A balancing charge is something HMRC uses to prevent you from claiming too much tax relief for a piece of equipment.

If you’re self-employed and you buy a laptop, for instance, you can claim capital allowances like the Annual Investment Allowance (AIA) for the cost of it.

If you later sell the laptop, you might need to add a balancing charge to your profit and pay tax on it. The balancing charge is the capital allowance you claimed for the laptop minus the resale price. 

But what does this mean in practice?

The balancing charge in action

what is the balancing charge


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