Depreciation Calculator guide
Depreciation Calculator: Straight Line and Reducing Balance
Use our depreciation calculator to build a depreciation schedule for an asset using straight-line, reducing-balance or sum-of-the-years'-digits methods.
By the AllCalculator editorial teamUpdated 16 October 20261 min read
Depreciation spreads the cost of an asset, like a van or machinery, over its useful life. Our Depreciation Calculator builds the schedule for you.
How to use the calculator (Depreciation Calculator)
- Enter the cost of the asset.
- Enter its residual value: what it'll be worth at the end.
- Enter its useful life in years.
- Choose a method.
The methods
- Straight line: the same amount each year. (Cost − residual) ÷ life.
- Reducing balance: a fixed percentage of the remaining value each year, so it's higher at the start.
- Sum of the years' digits: front-loaded, using fractions that add up to the whole.
A worked example
With the calculator's default settings, a £20,000 asset with a £2,000 residual value over 5 years on the straight-line method depreciates by £3,600 a year.
Depreciation and UK tax
Depreciation goes in your accounts, but it isn't allowed for tax. Instead, businesses claim capital allowances, such as the Annual Investment Allowance, which lets you deduct the full cost of most equipment up to £1 million a year.
Frequently asked questions
Which method should I use?
Straight line suits assets used evenly; reducing balance suits assets that lose value quickly, like vehicles and computers.
Does land depreciate?
No. Land isn't depreciated in accounts.
Sources and further reading
Links open official and independent websites in a new tab.
This guide is general information to help you understand your options. It isn't financial, tax, legal or building advice and doesn't take your personal circumstances into account. Figures were checked when the guide was last updated and can change, so confirm anything important with GOV.UK, HMRC, a regulated adviser or a qualified tradesperson.