Capital Allowances Act 1990

140 Income tax allowances and charges in taxing a trade etc

(1) This section has effect as respects allowances and charges which, under the provisions of this Act as they apply for the purposes of income tax, fall to be made to a person in taxing his trade.

(2) Allowances which fall to be made to a person in taxing his trade shall be made as a deduction in charging the profits or gains of the trade to income tax.

(3) Any claim by a person for an allowance falling to be made to him in taxing his trade shall be made in his returns of income for income tax purposes, and section 42 of the [1970 c. 9.] Taxes Management Act 1970 shall not apply to any such claim.

(4) Where full effect cannot be given in any year to any allowance falling to be made in taxing a trade owing to there being no profits or gains of the trade chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be carried forward and, so far as may be, made as a deduction in charging the profits or gains of the trade in subsequent years of assessment.

(5) Where the allowances in respect of which deductions can be made under this section for any year include allowances carried forward under subsection (4) above from a previous year, the allowances shall, subject to paragraph 5 of Schedule 9 to the [1981 c. 35.] Finance Act 1981, be deducted in the following order—

(a) allowances other than those carried forward under subsection (4) above from an earlier year;

(b) allowances carried forward under subsection (4) above from earlier years of assessment not earlier than the year for which the basis period ended on or included 14th November 1980;

(c) allowances carried forward under subsection (4) above from years of assessment earlier than those referred to in paragraph (b) above.

(6) Subsection (4) above has effect subject to section 383 of the principal Act (right to set capital allowances against general income).

(7) Any charge falling to be made on a person for any year of assessment in taxing his trade shall be made by means of an assessment to income tax on the profits or gains of that trade for that year of assessment in addition to any other assessment falling to be made thereon for that year.

(8) This section shall apply in relation to professions, employments, vocations and offices, and the occupation of woodlands the profits or gains whereof are assessable under Schedule D, as it applies in relation to trades, and nothing in this section applies to any deduction allowable under any provision of Parts I, II, IV, V and VI in computing the profits or gains of a trade.

(9) Subsection (8) above shall have effect after 5th April 1993 with the omission of the words “and the occupation of woodlands the profits or gains whereof are assessable under Schedule D”.

(10) Deductions allowable in taxing a trade under Part VII as it applies for the purposes of income tax shall be given effect in accordance with subsections (2) and (4) above.