Straight-line depreciation
How much you can write off each year on a van, a laptop or a machine, and what it is worth on the books at every point.
Your figures
Result
- Per month
- $333.33
- Depreciable base
- $20,000.00
- Annual rate
- 16.67%
- Value at the end
- $4,000.00
Depreciation schedule
| Year | Charge for the year | Accumulated depreciation | Book value |
|---|---|---|---|
| 1 | $4,000.00 | $4,000.00 | $20,000.00 |
| 2 | $4,000.00 | $8,000.00 | $16,000.00 |
| 3 | $4,000.00 | $12,000.00 | $12,000.00 |
| 4 | $4,000.00 | $16,000.00 | $8,000.00 |
| 5 | $4,000.00 | $20,000.00 | $4,000.00 |
What we assume
- Straight-line method: the same charge every year.
- The first year is depreciated in full, with no monthly proration.
- Salvage value is not depreciated: it is subtracted before spreading.
- Your tax authority’s published rates override this estimate.
How it is calculated
Straight-line depreciation spreads the wear of an asset in equal parts:
annual charge = (purchase price − salvage value) / years of useful life
On a van costing £24,000 that you expect to sell for £4,000 after five years: (24,000 − 4,000) / 5 = £4,000 a year.
Why salvage value is subtracted
Because that part is not lost: you get it back when you sell. Depreciating the full £24,000 would write off money that is still there, and would leave the asset at zero on the books while the market says £4,000.
Book value
This is what the asset is worth in your books at any moment: purchase price less everything depreciated so far. It falls in a straight line to the salvage value and stops there.
Where straight-line falls down
In that the real world is not linear. A car loses 20 to 30% the moment it leaves the forecourt, and a laptop is worth considerably less after year one than after year four. That is what accelerated methods like sum-of-years-digits or reducing balance are for: they load more of the cost at the start.
Straight-line is still the most used because it is the simplest, the easiest to audit, and the one nearly every tax authority accepts without argument.
A warning about rates
This calculates economic depreciation, the kind that reflects real wear. Tax depreciation is a different thing: every country publishes tables of maximum rates and periods by asset type, and those are what determine your deduction. Use this to plan, not to file.
An example
A van costing £24,000 with a £4,000 salvage value and a 5-year life depreciates at £4,000 a year, or £333.33 a month. Its book value goes from 24,000 to 20,000 in year one, and reaches 4,000 in year five.
Frequently asked questions
What useful life should I use?
However long you expect to use it, unless your tax authority fixes another for filing. As rough guidance: computers and phones 3 to 5 years, vehicles 5 to 8, furniture 10, machinery 8 to 15, and buildings 25 or more.
What if I sell the asset early?
Depreciation stops at that point and you compare the sale price with the book value on the day. Sell above it and there is a gain; sell below and there is a loss. Both go through your profit and loss.
Is the first year depreciated in full?
Here it is, so the schedule reads cleanly. In real accounting the norm is to prorate from the date it entered service: buying in October usually gives three months of charge that year, not twelve.
Does land depreciate?
No. Land does not wear out, so on a property you have to separate the value of the land from the building and depreciate only the second part.
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Updated on 2026-09-10. Calculations run in your browser; nothing you type is sent to a server.