Do You Need a Capital Allowance Opening Balance?

Of everything on the setup checklist, this is the one item that does not apply to everyone — and working out whether it applies to you is the whole first half of the job. Get that right and the rest is one number in one box.

Does this apply to you?

One question decides it: did your business own fixed assets, and claim capital allowances on them, before you started using Core Ledger?

• No — every asset was bought after you started here. Nothing to enter. The capital allowance schedule builds itself from the assets you add, starting from their real cost and acquisition dates. Skip this step entirely and lose nothing.
• No — the business is brand new, or asset-light. Same answer. This is the fastest item on the checklist precisely because there is nothing to do.
• Yes — you are migrating with assets that already have relief claimed against them. Then this figure matters, and leaving it at zero will overstate the relief available to you.

What the figure actually is

The opening unrecouped capital allowance balance is the relief that was still available to claim at the start of a fiscal year — allowances earned on assets you already owned but which had not yet been used against taxable profit when the year opened.

It is a tax-only figure. It exists to feed the company income tax computation, and it represents unrelieved allowances carried forward from prior years. Nothing about it is an accounting balance, which is why it does not appear anywhere in your chart of accounts.

Why it is kept away from your opening balances

Your general ledger opening balances establish your accounting position on day one: cash, receivables, payables, capital, retained earnings. They are a balance sheet, and they have to balance.

This figure is narrower and answers to a different system. The two do not interact, do not need to agree, and would be actively confusing on one screen — a number that must balance sitting next to a number that has nothing to balance against. That is why they live in different places rather than being folded together for convenience.

Where to enter it, exactly

It is on the tax settings screen, in the section headed Capital Allowance — Opening Unrecouped Balance. You will see one field per fiscal year you have configured, each labelled with the year it belongs to, because the figure is the balance at the start of that year rather than a single value for the business.

• Each field saves as you leave it — there is no separate submit for the section.
• A field for a closed fiscal year is locked and reads “fiscal year is closed”. Same principle as your opening balances: changing the starting point of a settled year would silently reshape everything computed after it.
• The data import tool does not load this. It is a single figure entered by hand, once.

You only do this once

The manual entry is a migration step, not an annual chore. For your first year on the system, you tell it what you were carrying. From then on the closing unrecouped balance from each year's capital allowance schedule rolls forward into the next year on its own — the number is computed rather than typed, because by then the system has the full asset history it needs to compute it.

Getting the number right

Five minutes when it applies, and no minutes when it does not. The only expensive version of this step is the one where it applied and nobody noticed.