Depreciation Calculator
Enter the cost, the scrap value and the life in years. Choose a method and see the charge and the value left in each year.
For tax, businesses claim capital allowances rather than depreciation, so use this for accounts and planning.
Worked examples
Straight line
£10,000 cost, £1,000 end value, 5 years
£1,800 a year
(10,000 - 1,000) ÷ 5 = 1,800.
Reducing balance at 20%
£10,000 cost, 20% a year
Year 1 £2,000, year 2 £1,600
20% of £10,000, then 20% of the remaining £8,000.
About Depreciation Calculator
Depreciation spreads the cost of an asset, such as a vehicle, computer or machine, over the years you expect to use it. Rather than recording the whole cost in the year you buy it, you record a share each year, and the value of the asset in your accounts falls to a scrap or resale value at the end of its life.
Two methods are common. Straight line charges the same amount each year, which is simple and predictable. Reducing balance charges a fixed percentage of the remaining value, so the charge is highest in year one and falls after that, matching assets that lose value quickly. Enter the cost, the value at the end and the life in years, pick a method, and the page shows each year's charge and remaining value.
How to use Depreciation Calculator
- Enter the cost of the asset.
- Enter the value you expect it to have at the end of its life, and the number of years.
- Choose straight line or reducing balance.
- For reducing balance, leave the rate empty to end on the exact value, or enter your own rate. Read the table.
Common uses
- Preparing management accounts for a small business
- Planning replacement of a vehicle or equipment
- Comparing methods to see how the yearly charge differs
- Estimating the future value of a company car or machine
Sources
Last reviewed 18 October 2026.
Frequently asked questions
What is straight line depreciation?
It spreads the cost of an asset less its end value evenly over its life. An asset costing £10,000 with a £1,000 end value over five years loses £1,800 every year.
What is reducing balance depreciation?
It charges a fixed percentage of the value left at the start of each year. The amount falls each year, because the value it is applied to is lower.
Which method should I use?
Use straight line for assets that wear out evenly, and reducing balance for assets such as cars and computers that lose most value early. Be consistent from year to year, and check what your accountant uses.
Is this the same as capital allowances?
No. Depreciation is an accounting charge. For tax, businesses claim capital allowances at rates set by HMRC, and depreciation is added back when working out taxable profit.
What happens if I enter a rate?
The charge each year is that percentage of the opening value, but never takes the value below the end value you entered.