Depreciation allows for the wear and tear on a fixed asset and must be deducted from your income. You must claim depreciation on fixed assets used in your business that have a useful lifespan of more than 12 months. Not all fixed assets can be depreciated. Land and some buildings are common examples of a fixed asset that cannot be depreciated. Residential property investment buildings can not be depreciated.


You need to keep a fixed asset register to show assets you are depreciating. This should show the depreciation claimed and adjusted tax value of each asset. The adjusted tax value is the asset’s cost price, less all depreciation calculated since purchase. Cornish Accounting will do all this for you.

Depreciation Rates

Assets are depreciated at different rates. In most circumstances you can choose between the diminishing value and straight- line methods of calculating depreciation.

You do not have to use the same depreciation method for all your assets, but you must use whatever method you choose for an asset for the full year. You can change methods for any asset from year to year.

Diminishing value depreciation 

This method depreciates at a higher rate for the start of an assets life and has a reducing claim each year. The value of the asset is the original cost less any depreciation already claimed in previous years. If you are registered for GST the original cost price should not include GST you have already claimed in your GST return.

Straight line depreciation

Depreciation is calculated on the original cost price of the asset, and the same amount is claimed each year. If you are registered for GST, the cost excludes any GST you have already claimed in your GST return.