Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
In traditional accounting depreciation is applied to accounts to spread the cost of an asset against the trading income over the anticipated life of the item(s). In fact it reduces your profits.
So far so good. HMRC does not recognise depreciation in taxation computations so having derived your annual profit the first thing that happems in the computation is that it is added back to your profit thus increasing the sum liable to tax. Welcome to the Alice in Womderland world of capital allowances (CAs)!
In place of depreciation in a tax computation you have CAs. These are relatively complex depending on the period(s) in which the expenditure on purchasing the asset occurred, but can be as high as 100% as Iniitial Investment Allowance.
Much further I cannot go without more detail on the matter. Whenever I do a tax computation I have a capital allowance block at the bottom to calculate the various pools, writing down allowances (currently 18% per annum), Initial Investment Allowances etc. The final total of CAs available is applied to the profits from the normal accouning process after addition of the depreciation figure to derive the profit liable to tax.
Simple, as the Meerkat in the TV advert would say.
I do hope that I have been able to shed some light on your question. I suspect that you may have to come back to me on this one.