Plant & Machinery and Its Depreciation: Codes 0020 & 0021

Fixed assets bought to help produce or deliver a service — like plant and machinery — are recorded at cost when purchased, but their value doesn't stay at cost forever. Sage tracks the original cost and the accumulated loss in value in two separate codes, so the balance sheet always shows both figures rather than quietly netting them off.

The two codes, and what each one holds

Code 0020 — Plant and Machinery records the original purchase cost of machinery and production equipment bought for the business to use, not resell. It's a Fixed Assets code and normally carries a debit balance: buying a new machine debits it, and only disposing of the asset credits it back down.

Code 0021 — Plant/Machinery Depreciation is the accumulated depreciation account sitting alongside 0020 — a contra-asset account that normally carries a credit balance, the opposite of the asset it relates to. Each year's depreciation charge (posted as an expense to code 8001) increases this credit balance, gradually reducing the machine's net book value without ever touching the original cost recorded in 0020.

Real-world examples across industries

Manufacturing

A manufacturer buys a CNC machining centre for the factory floor, invoiced at £96,000 (£80,000 net) — a debit of £80,000 to 0020 (Plant and Machinery), a debit of £16,000 to 2201, and a credit of £96,000 to 2100, with input VAT reclaimable in full. Expecting the machine to last around 12 years, it depreciates the asset on a straight-line basis at roughly £6,700 a year: debit £6,700 to code 8001, credit £6,700 to 0021 (Plant/Machinery Depreciation) — no VAT anywhere in this second entry, since depreciation is a non-cash accounting adjustment rather than a purchase. Machinery like this is also usually where most of a manufacturer's capital allowances claim sits, since the Annual Investment Allowance lets qualifying spend be deducted from taxable profit in the year it's bought, separately from the depreciation charged in the accounts.

Food and hospitality

A restaurant fits out its kitchen with commercial ovens and an extraction system, invoiced at £14,400 (£12,000 net) — debit £12,000 to 0020, debit £2,400 to 2201, credit £14,400 to 2100. Depreciated over 8 years, the annual charge is £1,500: debit £1,500 to 8001, credit £1,500 to 0021. It's a meaningful capital outlay for a single site, but nowhere near the scale of the manufacturer above — the difference is mostly one of magnitude rather than mechanics.

Bakery or food production line

A bakery running production equipment under near-continuous multi-shift use buys a mixing and proving line for £30,000 (net), assuming a much shorter 5-year useful life than the manufacturer's CNC machine — genuinely faster wear, not just a different accounting choice. The annual depreciation charge of £6,000 (debit 8001, credit 0021) is a noticeably higher proportion of original cost each year than either example above, even though the underlying entry is identical.

Why this matters day to day

Keeping cost and depreciation in separate codes means you can always see both the original spend and how much value has been written off, which matters for fixed asset registers and insurance valuations. Posting a disposal to the wrong code, or forgetting to remove the accumulated depreciation when an asset is scrapped, is one of the more common ways a fixed asset schedule drifts out of line with reality.