Tax Rates Resources

Each year the depreciation for the year is calculated, charged to the profit and loss account and deducted from cost. This deduction from cost is called accumulated depreciation and is made up of the total years depreciation charges to date tax resources.

Net book value which is original cost less accumulated depreciation will therefore decrease every year. Let us assume that in the y/e 31.12.1999 machinery costing £10,000 was purchased and depreciation to be charged is £2,500 per year.