Depreciation and capital allowance calculator

How to use the calculator

1. Choose the mode: accounting depreciation for your financial statements, or Nigerian capital allowances for your tax computation.
2. Set your accounting year end. Years in the schedule are your accounting years.
3. Add each asset with its cost and the date you bought it or first used it in the business.
4. For accounting depreciation, pick straight line or reducing balance, the useful life, any residual value, and for reducing balance the rate. Choose whether the first year counts in full or by months owned.
5. For capital allowances, pick the asset’s class and, if you also use it privately, the business-use percentage.
6. Read the schedule, then download it as Excel or PDF.

Straight line and reducing balance

• Straight line: (cost − residual value) ÷ useful life, the same charge every full year.
• Reducing balance: rate × book value at the start of the year, so the charge is largest in the first year and falls each year after.
• Book value = cost − depreciation charged so far. It never goes below the residual value.

A ₦1,200,000 piece of furniture bought on 5 October, depreciated straight line over four years with nothing left at the end, costs ₦300,000 a year. Counted by months, the first year (October to December) takes ₦75,000 and the last ₦225,000 falls in a fifth accounting year.

The facts: capital allowances under the Nigeria Tax Act 2025

Capital allowances for companies and individuals are set by section 27 and Part I of the First Schedule to the Nigeria Tax Act, 2025 (gazetted text), in force from 1 January 2026. The calculator applies these rules as written:

• Paragraph 6: for each year an asset is used in the business, an allowance is given at the Table I rate. Table I sets one annual rate per class and no separate initial allowance. The calculator applies the rate to the cost every year until the cost is used up, so a Class 3 asset is written off over four years, Class 2 over five and Class 1 over ten.
• Paragraph 6(a): 1% of the cost is recorded in the computation for statistical purposes until the asset is disposed of. It is a notional amount and does not increase or reduce the allowance.
• Paragraph 6(b): where a basis period is shorter than a year, that year’s allowance is reduced proportionately. The calculator assumes 12-month years.
• Paragraph 7: an allowance is given for a year if, at the end of the basis period, you own the asset and use it in the business. The calculator therefore gives a full year’s allowance in the year of purchase, whatever the purchase date.
• Section 27(3) and paragraph 16: an asset only partly used to earn taxable income gets only the business share. Under section 27(4), a company does not prorate where its non-taxable income is less than 10% of its total income.
• Section 27(2)(b): expenditure is not qualifying where VAT was due but not charged on the asset, or where import duty or levy on an imported item was not paid.
• Paragraph 23: for assets already claimed under the old law before 1 January 2026, the years left are the years allowed under the Act less the years already claimed. This calculator does not handle those transitional cases.

For the accounts: section 21(g) of the Act disallows depreciation as a tax deduction, so your accounting profit and your taxable profit differ by depreciation added back and capital allowances deducted. IAS 16 governs depreciation of property, plant and equipment; in 2014 the IASB amended it to prohibit revenue-based depreciation methods.

Basis periods, disposals (balancing adjustments), assets bought on hire purchase and the sector rules in Parts II and III of the Schedule are not modelled. Have a tax adviser check a computation before you file it.

Sources, checked 2 November 2026: Nigeria Tax Act, 2025, Official Gazette No. 117, Vol. 112: sections 21 and 27; First Schedule, Part I, paragraphs 1, 6, 7, 8, 16 and 23 and Table I (pages A514–A524); NRS tax laws page; IFRS Foundation, IAS 16.