From the time of its creation in 1948 until 1991 the NHS, in common with most of the public sector, did not include a comprehensive depreciation charge when preparing its annual cost statements or other accounts. The lack of depreciation was noted as a deficiency from time to time, and some minor moves, subsequently abandoned, were made towards its adoption. The Government White Paper (1989) proposed changes, put into effect in 1991, to the way in which the parts of the NHS which deliver health care to the population derive their funds. This introduced a competitive ethos whereby income has to be generated by attracting patients whose treatment is paid for by budget holders funded from central government. Part of the package of reforms was the introduction of capital charges, comprising depreciation and interest, which must be entered in cost statements and recovered in the costs charged to purchasers of health care. This paper describes the approach of the NHS to depreciation charges over the years, and examines why, at various times, their use has been recommended or rejected. It then considers why comprehensive adoption has now taken place, and concludes that the experience of the NHS provides an exposition of the perceived need for depreciation accounting when measuring the results of trading-type activity.