Page updated 5 Aug 2015
The Capital Charge ensures that prices for goods and services produced by government departments reflect full production costs including the government's cost of capital; allows comparison of the costs of output production with those of other producers (whether in the public or private sector); and creates an incentive for departments to make proper use of working capital and to dispose of surplus fixed assets. The capital charge rate is calculated in the same way as the public sector discount rate, see Public Sector Discount Rates for Cost Benefit Analysis
Treasury Circular 2011/04: March Baseline Update 2011: Changes to the Capital Charge Rate outlines the current capital charge rate.
The current capital charge rate for 2014/15 is 8%.