Sub-procedure
Capital Charges
A.
CALCULATION OF CHARGES
Introduction
Capital interest charges, depreciation, and debt management expenses for a financial year
are calculated based upon a percentage of the assets held by the Education Department
during that year.
The Department of Finance provide a list of all Education Assets, which should be
reconciled with the previous listing, taking account of any additions, disposals, transfers,
re-valuations and enhancements. The updated list is returned to the Department of
finance, who then calculate the charges.
Each October estimates are produced for the future year (and a revision for the current
year), and in February the actual figures for the current year are produced.
Capital charges are calculated for the following asset categories:
Land & Buildings / Furniture / Vehicles / Equipment
The assets within each of these categories fall into the following divisions of service:
Pre-primary, Primary, Secondary, Special, Youth & Community, Adult and Pupil Referral
Units, Children & Families.
i. Check the register of assets produced by The Department of Finance to ensure the
assets held at the start of the current financial year agree to last times papers.
a. Agree the current financial year’s additions and disposals details to known
information, e.g. the latest version of the Officers Education Capital Budget
Book/information on file.
ii. The final totals for each division of service represent the value of assets it is estimated
will be held at the start of the forthcoming financial year. Ascertain the additions and
disposals for the forthcoming financial year and agree these to known information, e.g.
the latest version of the Officers Education Capital/Revenue Budget Book.
The calculations are based on the percentages advised by the Department of Finance each
year and are as follows; the Department of Finance calculate these, and will send them to
be checked.
1.
CAPITAL INTEREST CHARGES
Land & buildings
Multiply the totals for each division by percentage advised.
Vehicles, Furniture and IT Equipment
Multiply net value of assets at start of year (after depreciation) by percentage
advised.
Note for additions and disposals adjust for number of months applicable.
Version: 06
Doc Ref: 0091
Author: Nichola Rathbone (Senior Finance Officer)
Page 1 of 3
Sub-procedure
Capital Charges
2.
DEPRECIATION
Divide the totals for each division by number of years advised over which the asset
will be depreciated (see individual categories below). Note for additions and
disposals adjust for number of months applicable.
Land & buildings
Depreciation is charged on buildings only based on a life expectancy of 30 years,
however this will need to be adjusted for some assets, which have a life expectancy
other than 30 years.
Furniture and IT Equipment
The cost of assets are written off normally over 5 years
Vehicles
Only vehicles, which cost £20,000 or more, attract these charges.
Vehicles are normally written off over 7 years from the acquisition date.
3.
DEFERRED CHARGES
These charges are incurred on completed capital projects for church controlled and
foundation schools. Church controlled schools and foundation schools should be
included within the asset register at a nominal value of £1. As a consequence, when
capital projects for such schools are completed, it is the policy for the costs to be
written off over a period of five years, commencing in the year of completion. Prior
years' completed projects should be agreed to last year’s papers.
Obtain the total costs of additions for the current and the forthcoming years,
construction, furniture and fees and write these off over five years. Details can be
found on the list of transfers to fixed assets/completion’s advised to Department of
Finance at the end of the financial year.
If costs are incurred on a project in subsequent years, these should be written off
over the remaining number of years from the original five.
4.
DEBT MANAGEMENT EXPENSES
These are charges calculated on the aggregate of capital and deferred charges for
each division of service. These are calculated at a rate specified by the Department
of Finance.
5.
GRANT & CONTRIBUTIONS DEFFERED
Where the asset is financed either wholly or partly by a grant or contribution, the
amount of grant or contribution is credited to the grants/contributions deferred
account, and written off to revenue over the life of the asset to match depreciation.
We have to advise the Department of Finance which assets are financed partly or
wholly by grant. They will calculate the figure and send it to us for checking.
Version: 06
Doc Ref: 0091
Author: Nichola Rathbone (Senior Finance Officer)
Page 2 of 3
Sub-procedure
Capital Charges
B.
1.
POSTING OF CHARGES TO REVENUE BUDGET
Once the figures are calculated, they need to be posted to the correct budget cost
centres, EA0020 - EZ9250 and SA0000 - SA9999
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
Budget Cost
Centre Code
EM0020
EM2230
EM2640
EM2731
EF4600
ED4091
SA9999
Pre-primary
Primary
Secondary
Special
Youth & Community
Pupil Referral Units
Children & Families
The subjective codes are:
81000
81030
99420
88150
99450
Depreciation charges
Deferred charges
Grant and deferred charges
Debt management
Grant and contribution deferred
Bank Adjustment
The estimates are calculated in October for the forthcoming year. Once the actuals
have been calculated in February, a base adjustment will need to be made to the
budget.
2.
C.
ENSURE REVENUE
PROCEDURES
ESTIMATE
FORM
IS
UPDATED
AS
PER
FIMS
NOTIFICATION TO DEPARTMENT OF FINANCE
Once all of the charges have been calculated and posted, supply the Department of
Finance with a copy of the charges.
Version: 06
Doc Ref: 0091
Author: Nichola Rathbone (Senior Finance Officer)
Page 3 of 3