Depreciation Calculator
Depreciation Summary
Annual Depreciation-
Monthly Depreciation-
Total Depreciation-
Book Value After Year 1-
Book Value at End-
Depreciation Methods Compared
| Method | Year 1 | Year 3 | Year 5 | Best For |
|---|---|---|---|---|
| Straight Line | 20% | 20% | 20% | Even usage |
| Reducing 18% | 18% | 12.1% | 8.1% | Plant & machinery |
| Reducing 6% | 6% | 5.3% | 4.7% | Buildings (special rate) |
Straight line gives equal annual amounts. Reducing balance front-loads depreciation, reflecting faster initial value loss. HMRC capital allowances use 18% (main pool) and 6% (special rate pool).
UK Capital Allowances 2025/26
Annual Investment Allowance
£1,000,000
Main Pool WDA
18%
Special Rate Pool
6%
Full Expensing
100%
FYA (Electric Cars)
100%
Small Pool WDA
£1,000
How to Use This Calculator
1
Enter asset cost
Input the original purchase price of the asset including delivery and installation.
2
Set salvage value
Enter the estimated value at the end of useful life. Set to 0 if the asset will have no residual value.
3
Enter useful life
Input the expected number of years the asset will be used in the business.
4
Choose depreciation method
Straight line for even depreciation, reducing balance 18% for plant and machinery, 6% for special rate assets.
5
Review depreciation schedule
See annual, monthly and total depreciation along with book values at key points.
Frequently Asked Questions
What is straight-line depreciation?
Straight-line depreciation spreads the cost evenly over the asset’s useful life. Annual depreciation = (Cost - Salvage Value) / Useful Life. It is the simplest and most common method for accounting purposes.
What is reducing balance depreciation?
Reducing balance applies a fixed percentage to the remaining book value each year. This front-loads the depreciation, giving higher charges in early years. HMRC uses 18% for the main pool and 6% for special rate pool.
What are capital allowances?
Capital allowances are the UK tax equivalent of depreciation. Instead of deducting accounting depreciation, businesses claim capital allowances at HMRC-specified rates. The Annual Investment Allowance allows 100% first-year deduction on qualifying assets up to £1,000,000.
What is full expensing?
Full expensing allows companies to deduct 100% of the cost of qualifying plant and machinery in the year of purchase. Introduced permanently from April 2023, it effectively replaces the super-deduction and applies to main-rate qualifying expenditure.
How do I choose a depreciation method?
Use straight-line for assets that provide even benefit over time (furniture, fixtures). Use reducing balance for assets that lose value faster initially (vehicles, technology). For tax purposes, you must use HMRC’s capital allowance rates regardless of your accounting method.
Official Sources & References
Data verified against official sources. Last checked April 2026.