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Capital Allowances Act 2001

  • Explanatory Notes Table of contents

Please note:

All reference to 'Parts' and 'sections' are from the Capital Allowances Act 2001. For more information about understanding Explanatory Notes click here.

  1. Summary

  2. Background

    1. The Tax Law Rewrite Project

    2. Steering Committee

    3. Consultative Committee

    4. Consultation

      1. Kpmg

    5. Capital allowances

    6. History of capital allowances

  3. The Act

  4. Commentary on Sections

    1. Glossary

      1. Part 1: Introduction

        1. Overview

        2. Background

          1. Section 1: Capital Allowances

          2. Section 2General means of giving effect to capital allowances

          3. Section 3Claims for capital allowances

          4. Section 4Capital Expenditure

          5. Section 5When capital expenditure is incurred

          6. Section 6Meaning of “chargeable period”

          7. Chapter 2: Exclusion of double relief

            1. Overview

              1. Section 7: No double allowances

              2. Section 8: No double relief through pooling under Part 2 (plant and machinery allowances)

              3. Section 9: Interaction between fixtures claims and other claims

              4. Section 10: Interpretation

      2. Part 2: Plant and machinery allowances

        1. Overview

        2. History

        3. Structure of Part 2

          1. Chapter 1: Introduction

            1. Overview

              1. Section 11: General conditions as to availability of plant and machinery allowances

              2. Section 12: Expenditure incurred before qualifying activity carried on

              3. Section 13: Use for qualifying activity of plant or machinery provided for other purposes

              4. Section 14: Use for qualifying activity of plant or machinery which is a gift

          2. Chapter 2: Qualifying activities

            1. Overview

              1. Section 15: Qualifying activities

              2. Section 16: Ordinary Schedule A businesses

              3. Section 17: Furnished holiday lettings businesses

              4. Section 504 of ICTA (Supplementary provisions)

              5. Section 18: Management of investment companies

              6. Section 19: Special leasing of plant or machinery

              7. Section 20: Employments and offices

          3. Chapter 3: Qualifying Expenditure

            1. Overview

              1. Section 21: Buildings

              2. Section 22: Structures, assets and works

              3. Section 23: Expenditure unaffected by sections 21 and 22

              4. Section 24: Interests in land

              5. Section 25: Building alterations connected with installation of plant or machinery

              6. Section 26: Demolition costs

              7. Section 27: Application of Part to thermal insulation, safety measures,

              8. Section 28: Thermal insulation of industrial buildings

              9. Section 29: Fire safety

              10. Section 30: Safety at designated sports grounds

              11. Section 31: Safety at regulated stands at sports grounds

              12. Section 32: Safety at other sports grounds

              13. Section 33: Personal security

              14. Section 34: Expenditure by MPs and others on accommodation

              15. Section 35: Expenditure on plant or machinery for use in dwelling-house not qualifying expenditure in certain cases

              16. Section 36: Restriction on qualifying expenditure in case of employment or office

              17. Section 37: Exclusion where sums payable in respect of depreciation

              18. Section 38: Production animals

          4. Chapter 4: First-year qualifying expenditure

            1. Overview

              1. Section 39: First-year allowances available for certain types of qualifying expenditure only

              2. Section 40: Expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises

              3. Sections 41 and 42: Exclusions from section 40

              4. Section 43: Effect of plant or machinery subsequently being primarily for use outside Northern Ireland

              5. Section 44: Expenditure incurred by small or medium-sized enterprises

              6. Section 45: ICT expenditure incurred by small enterprises

              7. Section 46: General exclusions applying to sections 40, 44 and 45

              8. Sections 47 to 49: Expenditure of small or medium-sized enterprises

              9. Section 247: Qualification of company as small or medium-sized

              10. Section 50: Time when expenditure is incurred

              11. Section 51: Disclosure of information between UK tax authorities

          5. Chapter 5: Allowances and charges

            1. Overview

              1. Section 52: First-year allowances

    2. Example

      1. Section 53: Pooling of qualifying expenditure

      2. Section 54: The different kinds of pools

      3. Section 55: Determination of entitlement or liability

      4. Section 56: Amount of allowances and charges

      5. Section 57: Available qualifying expenditure

      6. Section 58: Initial allocation of qualifying expenditure to pools

    3. Example

      1. Section 59: Unrelieved qualifying expenditure

    4. Example

      1. Section 60: Meaning of “disposal receipt” and “disposal event”

    5. Example

      1. Section 61: Disposal events and disposal values

    6. Example

      1. Section 62: General limit on amount of disposal value

      2. Section 63: Cases in which disposal value is nil

      3. Section 64: Case in which no disposal value need be brought into account

      4. Section 65: The final chargeable period

      5. Section 66: List of provisions outside this Chapter about disposal values

      6. Chapter 6: Hire-purchase and plant or machinery provided by lessee

        1. Overview

        2. Background

          1. Section 67: Plant or machinery treated as owned by person entitled to benefit of contract,

          2. Section 68: Disposal value on cessation of notional ownership

          3. Section 69: Hire-purchase and fixtures

          4. Section 70: Plant or machinery provided by lessee

      7. Chapter 7: Computer software

        1. Overview

          1. Section 71: Software and rights to software

          2. Section 72: Disposal values

          3. Section 73: Limit on disposal values

      8. Chapter 8: Cars,

        1. Overview

          1. Section 74: Single asset pool

          2. Section 75: General limit on amount of writing-down allowance

          3. Section 76: Limit where part of expenditure met by another person

          4. Section 77: Car used partly for purposes other than those of qualifying activity

          5. Section 78: Effects of partial depreciation subsidy

          6. Section 79: Cases where Chapter 17 (anti-avoidance) applies

          7. Section 80: Vehicles provided for purposes of employment or office

          8. Section 81: Extended meaning of “car”

          9. Section 82: Qualifying hire cars

      9. Chapter 9: Short-life assets

        1. Overview

          1. Section 83: Meaning of “short-life asset”

          2. Section 84: Cases in which short-life asset treatment is ruled out

          3. Section 85: Election for short-life asset treatment: procedure

          4. Section 86: Short-life asset pool

          5. Section 87: Short-life assets provided for leasing

          6. Section 88: Sales at under-value

          7. Section 89: Disposal to connected person

      10. Chapter 10: Long-life assets

        1. Overview

        2. Background

          1. Section 90: Long-life asset expenditure

          2. Section 91: Meaning of “long-life asset”

          3. Section 92: Application of Chapter to part of expenditure

          4. Section 93: Fixtures

          5. Section 94: Ships

          6. Section 95: Railway assets

          7. Section 96: Cars

          8. Sections 97 to 100: Monetary limit

          9. Section 101: Long-life asset pool

          10. Section 102: Writing-down allowances at 6%

          11. Section 103: Later claims

          12. Section 104: Disposal value of long-life assets

      11. Chapter 11: Overseas leasing

        1. Overview

        2. Background

          1. Section 105: “Leasing”, “overseas leasing”

          2. Section 106: The designated period

          3. Section 107: The overseas leasing pool

          4. Section 108: Effect of disposal to connected person on overseas leasing pool

          5. Section 109: Writing-down allowances at 10%

          6. Section 110: Cases where allowances are prohibited

          7. Section 111: Excess allowances: standard recovery mechanism

          8. Section 112: Excess allowances: connected persons

          9. Section 113: Special provision for ships

          10. Section 114: Prohibited allowances: standard recovery mechanisms

          11. Section 115: Prohibited allowances: connected persons

          12. Section 116: Mitigation of regime

          13. Section 117: Recovery of allowances in case of joint lessees

          14. Sections 118 to 120: Certificate and notices

          15. Section 121: Meaning of “short-term leasing”

          16. Section 122: Short-term leasing by buyer, lessee,

          17. Section 123: Ships and aircraft

          18. Section 124: Transport containers

          19. Section 125: Other qualifying purposes

          20. Section 126: Minor definitions

      12. Chapter 12: Ships

        1. Overview

    7. Background

      1. Section 127: Single ship pool

      2. Section 128: Expenditure which is not to be allocated to single ship pool

      3. Section 129: Election to use the appropriate non-ship pool

      4. Section 130: Notice postponing first-year or writing-down allowance

      5. Section 131: Effect of postponement

      6. Section 132: Disposal events and single ship pool

      7. Section 133: Ship not used

      8. Section 134: Deferment of balancing charges: introduction

      9. Sections 135 and 136: Claims and conditions for deferment

      10. Section 137: Effect of deferment

      11. Section 138: Limit on amount deferred

    8. Example

      1. Section 139: Amount taken into account in respect of old ship

      2. Section 140: Notice attributing deferred amounts to new expenditure

      3. Section 141: Deferred amounts attributed to earlier expenditure first

      4. Section 142: Variation of attribution

    9. Example

      1. Section 143: Effect of attribution

      2. Section 144: Amounts which cease to be attributable

      3. Section 145: Requirement to notify where no entitlement to defer amounts

      4. Section 146: Basic meaning of expenditure on new shipping

      5. Section 147: Exclusions: ship previously owned

    10. Example

      1. Section 148: Exclusions: object to secure deferment

      2. Section 149: Exclusions: later events

      3. Section 150: Exclusions where expenditure not incurred by shipowner

      4. Section 151: Basic meaning of qualifying ship

      5. Section 152: Ships under 100 tons

      6. Section 153: Ships which are not qualifying ships

    11. Regulation 3(1) of the Offshore Installations and Pipeline Works (Management and Administration) Regulations 1995 (SI 1995/738)

      1. Section 12 of the Mineral Workings (Offshore Installations) Act 1971

      2. Section 154: Further registration requirement

      3. Section 155: Change in the persons carrying on the qualifying activity

      4. Section 156: Connected persons

      5. Section 157: Adjustment of assessments

      6. Section 158: Members of same group

      7. Chapter 13: Provisions affecting mining and oil industries

        1. Overview

        2. Background

          1. Section 159: Meaning of “mineral extraction trade”

          2. Section 160: Expenditure treated as incurred for purposes of mineral extraction trade

          3. Section 161: Pre-trading expenditure on mineral exploration and access

          4. Section 162: Ring fence trade a separate qualifying activity

          5. Section 163: Meaning of “abandonment expenditure”

          6. Section 164: Abandonment expenditure incurred before cessation of ring fence trade

          7. Section 165: Abandonment expenditure within 3 years of ceasing ring fence trade

          8. Section 166: Transfers of interests in oil fields: anti-avoidance

          9. Section 167: Oil production sharing contracts

          10. Section 168: Expenditure on plant or machinery incurred by contractor

          11. Section 169: Expenditure on plant or machinery incurred by participator

          12. Section 170: Participator’s expenditure attributable to plant or machinery

          13. Section 171: Disposal values on cessation of ownership

      8. Chapter 14: Fixtures

        1. Overview

          1. Section 172: Scope of Chapter

          2. Section 173: Meaning of “fixture” and “relevant land”

          3. Section 174: Meaning of “equipment lease” and “lease”

          4. Section 175: Meaning of “interest in land”,

          5. Section 176: Person with interest in relevant land having fixture for purposes of qualifying activity

    12. Example

      1. Section 177: Equipment lessors

      2. Section 178: Equipment lessee has qualifying activity

      3. Section 179: Equipment lessor has right to sever fixture that is not part of building

      4. Section 180: Equipment lease is part of affordable warmth programme

      5. Section 181: Purchaser of land giving consideration for fixture

    13. Example

      1. Section 182: Purchaser of land discharging obligations of equipment lessee

      2. Section 183: Incoming lessee where lessor entitled to allowances

      3. Section 184: Incoming lessee where lessor not entitled to allowances

      4. Section 185: Fixture on which a plant and machinery allowance has been claimed

      5. Section 186: Fixture on which an industrial buildings allowance has been made

      6. Section 187: Fixture on which a research and development allowance has been made

      7. Section 188: Cessation of ownership when person ceases to have qualifying interest

      8. Section 189: Identifying the qualifying interest in special cases

      9. Section 190: Cessation of ownership of lessor where section 183 applies

      10. Section 191: Cessation of ownership on severance of fixture

      11. Section 192: Cessation of ownership of equipment lessor

      12. Section 193: Acquisition of ownership by lessor or licensor on termination of lease or licence

      13. Section 194: Acquisition of ownership by assignee of equipment lessor

      14. Section 195: Acquisition of ownership by equipment lessee

      15. Section 196: Disposal values in relation to fixtures: general

      16. Section 197: Disposal values in avoidance cases

      17. Section 198: Election to apportion sale price on sale of qualifying interest

      18. Section 199: Election to apportion capital sum given by lessee on grant of lease

      19. Section 200: Elections under section 198 and 199: supplementary

    14. Example

      1. Section 201: Elections under sections 198 and 199: procedure

      2. Section 202: Interpretation

      3. Section 203: Amendment of returns and adjustment of assessments

      4. Section 204: Appeals

      5. Chapter 15: Asset provided or used only partly for qualifying activity

        1. Overview

        2. Background

          1. Section 205: Reduction of first-year allowances

          2. Section 206: Single asset pool

          3. Section 207: Reduction of allowances and charges on expenditure in single asset pool

          4. Section 208: Effect of significant reduction in use for purposes of qualifying activity

      6. Chapter 16: Partial depreciation subsidies

        1. Overview

        2. Background

          1. Section 209: Meaning of “partial depreciation subsidy”

          2. Section 210: Reduction of first-year allowances

          3. Section 211: Single asset pool

          4. Section 212: Reduction of allowances and charges on expenditure in single asset pool

      7. Chapter 17: Anti-avoidance

        1. Overview

        2. History

        3. Structure of Chapter 17

          1. Section 213: Relevant transactions: sale, hire-purchase () and assignment

          2. Sections 214 to 216: Connected persons, transactions to obtain allowances, and sale and leaseback

          3. Section 217No first-year allowance for B’s expenditure

          4. Section 218: Restriction on B’s qualifying expenditure

          5. Section 219: Meaning of “finance lease”

          6. Section 220Allocation of expenditure to a chargeable period

          7. Section 221Meaning of “sale and finance leaseback”

          8. Section 222Disposal value restricted

          9. Section 223No first-year allowance for B’s expenditure

          10. Section 224Restriction on B’s qualifying expenditure

          11. Section 225B’s qualifying expenditure if lessor not bearing non-compliance risk

          12. Section 226Qualifying expenditure limited in subsequent transactions

          13. Sections 227 and 228: Sale and leaseback or sale and finance leaseback: election for special treatment

          14. Section 229Hire-purchases

          15. Section 230Exception for manufacturers and suppliers

          16. Section 231Adjustment of assessments

          17. Section 232Meaning of “connected person”

          18. Section 233Additional VAT liabilities and rebates

      8. Chapter 18: Additional VAT liabilities and rebates

        1. Overview

          1. Section 234: Introduction

          2. Section 235: Additional VAT liability treated as qualifying expenditure

          3. Section 236: Additional VAT liability generates first-year allowance

          4. Section 237: Exceptions to section 237

          5. Section 238: Additional VAT rebate generates disposal value

          6. Section 239: Limit on disposal value where additional VAT rebate

          7. Section 240: Additional VAT liability

    15. Example

      1. Section 241: No first-year allowance in respect of additional VAT liability

      2. Section 242: Restriction on B’s qualifying expenditure: general

      3. Section 243: Restriction on B’s qualifying expenditure: sale and finance leaseback

      4. Section 244: B’s qualifying expenditure if lessor not bearing non-compliance risk

      5. Section 245: Effect of election under section 227 on additional VAT liability

      6. Section 246: Miscellaneous

      7. Chapter 19: Giving effect to allowances and charges

        1. Overview

          1. Sections 247 to 252: Trades, property businesses

          2. Section 253: Investment companies

          3. Sections 254 to 257: Life assurance business

          4. Sections 258 to 261: Special leasing of plant or machinery

          5. Section 262: Employments and offices

      8. Chapter 20: Supplementary provisions

        1. Overview

          1. Section 263: Qualifying activities carried on in partnership

          2. Section 264: Partnership using property of a partner

          3. Section 265: Successions: general

          4. Section 266: Election where predecessor and successor are connected persons

          5. Section 267: Effect of election

          6. Section 268: Successions by beneficiaries

          7. Section 269: Use of plant or machinery for business entertainment

          8. Section 270: Shares in plant or machinery

      9. Part 3: Industrial buildings allowances

        1. Overview

        2. Background

        3. History

          1. Chapter 1: Introduction

            1. Overview

              1. Section 271: Industrial buildings allowances

              2. Section 272: Expenditure on the construction of a building

              3. Section 273: Preparation of sites for plant or machinery

          2. Chapter 2: Industrial buildings

            1. Overview

              1. Section 274: Trades and undertakings which are “qualifying trades”

              2. Section 275: Building used for welfare of workers

              3. Section 276: Parts of trades and undertakings

              4. Section 277: Exclusion of dwelling-houses, retail shops, showrooms, hotels and offices

              5. Section 278: Building used by more than one licensee

              6. Section 279: Qualifying hotels

              7. Section 280: Qualifying sports pavilions

              8. Section 281: Commercial buildings (enterprise zones)

              9. Section 282: Buildings outside the United Kingdom

              10. Section 283: Non-industrial part of building disregarded

              11. Section 284: Roads on industrial estates

              12. Section 285: Cessation of use and temporary disuse of building

          3. Chapter 3: The relevant interest in the building

            1. Overview

              1. Section 286: General rule as to what is the relevant interest

              2. Section 287: Interest acquired on completion of construction

              3. Section 288: Effect of creation of subordinate interest

              4. Section 289: Merger of leasehold interest

              5. Sections 290 and 291: Election to treat grant of lease exceeding 50 years as sale

          4. Chapter 4: Qualifying expenditure

            1. Overview

              1. Section 292: Meaning of “qualifying expenditure”

              2. Section 293: Meaning of references to carrying on trade as a developer

              3. Section 294: Capital expenditure on construction of a building

              4. Section 295: Purchase of unused building where developer not involved

              5. Section 296: Purchase of building which has been sold unused by developer

              6. Section 297: Purchase of used building from developer

              7. Sections 298 to 304: qualifying enterprise zone expenditure

          5. Chapter 5: Initial Allowances

            1. Overview

              1. Section 305: Initial allowances for qualifying enterprise zone expenditure

              2. Section 306: Amount of initial allowance and period for which allowance made

              3. Section 307: Building not industrial building when it comes to be used

              4. Section 308: Grants affecting entitlement to initial allowances

          6. Chapter 6: Writing-down allowances

            1. Overview

              1. Section 309: Entitlement to writing-down allowance

              2. Section 310: Basic rule for calculating amount of allowance

              3. Section 311: Calculation of amount after sale of relevant interest

              4. Section 312: Allowance limited to residue of qualifying expenditure

              5. Section 313: Meaning of “the residue of qualifying expenditure”

          7. Chapter 7: Balancing adjustments

            1. Overview

              1. Section 314: When balancing adjustments are made

              2. Section 315: Main balancing events

              3. Section 316: Proceeds from main balancing events

              4. Section 317: Balancing event where hotel not qualifying hotel for 2 years

              5. Section 318: Building an industrial building throughout

              6. Section 319: Building not an industrial building throughout

              7. Section 320: Overall limit on balancing charge

              8. Section 321: The relevant period of ownership

              9. Section 322: Starting expenditure

              10. Section 323: Adjusted net cost

              11. Section 324: Net allowances

              12. Section 325: Balancing allowances restricted where sale subject to subordinate interest

              13. Section 326: Interpretation of section 325

              14. Section 327: Capital value provisions: application of provisions

              15. Section 328: Balancing adjustment on realisation of capital value

              16. Section 329: Capital value that is attributable to subordinate interest

              17. Section 330: Exception for payments more than 7 years after agreement

              18. Section 331: Capital value provisions: interpretation

          8. Chapter 8: Writing off qualifying expenditure

            1. Overview

              1. Section 332: Introduction

              2. Section 333: Writing off initial allowances

              3. Section 334: Writing off writing-down allowances

              4. Section 335: Writing off research and development allowances.

              5. Section 336: Writing off expenditure when building not an industrial building

              6. Section 337: Writing off or increase of expenditure where balancing adjustment made

              7. Section 338: Writing off capital value which has been realised

              8. Section 339: Crown or other person not within the charge to tax entitled to the relevant interest

              9. Section 340: Treatment of demolition costs

          9. Chapter 9: Highway undertakings

            1. Overview

              1. Section 341: Carrying on of highway undertakings

              2. Section 342: The relevant interest

              3. Section 343: Balancing adjustment on ending of concession

              4. Section 344: Cases where highway concession is to be treated as extended

          10. Chapter 10: Additional VAT liabilities and rebates

            1. Overview

              1. Section 345: Introduction

              2. Section 346: Additional VAT liabilities and initial allowances

              3. Section 347: Additional VAT liabilities and writing-down allowances

    16. Example

      1. Section 348: Additional VAT liabilities and writing off initial allowances

      2. Section 349 and 350: Additional VAT rebates

      3. Section 351: Additional VAT rebates and writing off qualifying expenditure

      4. Chapter 11: Giving effect to allowances and charges

        1. Overview

          1. Section 352: Trades

          2. Section 353: Lessors and licensors

          3. Section 354: Buildings temporarily out of use

          4. Section 355: Buildings for miners : carry-back of balancing allowances

      5. Chapter 12: Supplementary provisions

        1. Overview

          1. Section 356: Apportionment of sums partly referable to non-qualifying assets

          2. Section 357: Arrangements having an artificial effect on pricing

          3. Section 358: Requisitioned land

          4. Section 359: Provision applying on termination of lease

          5. Section 360: Meaning of “lease”

      6. Part 4: Agricultural buildings allowances

        1. Overview

        2. Background

        3. History

    17. Structure of Part 4

      1. Chapter 1: Introduction

        1. Overview

          1. Section 361: Agricultural buildings allowances

          2. Section 362: Meaning of “husbandry”

          3. Section 363: Expenditure on the construction of a building

      2. Chapter 2: The relevant interest

        1. Overview

          1. Section 364: General rule as to what is the relevant interest

          2. Section 365: Effect of creation of subordinate lease

          3. Section 366: Interest held as security

          4. Section 367: Merger of leasehold interest

          5. Section 368: Provisions applying on ending of lease

      3. Chapter 3: Qualifying expenditure

        1. Overview

          1. Section 369: Capital expenditure on construction of agricultural building

          2. Section 370: Purchase of relevant interest before first use of agricultural building

          3. Section 371: Different relevant interests in different parts of the related agricultural land

      4. Chapter 4: Writing-down allowances

        1. Overview

          1. Section 372: Entitlement to writing-down allowance

          2. Section 373: Basic rule for calculating amount of allowance

          3. Section 374: First use of building not for purposes of husbandry

          4. Section 375: Effect of acquisition of relevant interest after first use of building

          5. Section 376: Calculation of allowance after acquisition

          6. Section 377: Chargeable period when balancing adjustment made

          7. Section 378: Allowance limited to residue of qualifying expenditure

          8. Section 379: Final writing-down allowance

      5. Chapter 5: Balancing adjustments

        1. Overview

          1. Section 380: When balancing adjustments are made

          2. Section 381: Balancing events (on making an election)

          3. Section 382: Requirements as to elections

          4. Section 383: Proceeds from balancing events

          5. Section 384: Exclusion of proportion of proceeds

          6. Section 385: Calculation of balancing adjustment

          7. Section 386: The residue of qualifying expenditure

          8. Section 387: Overall limit on balancing charge

          9. Section 388: Acquisition of relevant interest in part of land,

          10. Section 389: Balancing allowances restricted where sale subject to subordinate interest

          11. Section 390: Interpretation of section 389

      6. Chapter 6: Supplementary provisions

        1. Overview

          1. Section 391: Trades

          2. Section 392: Schedule A businesses

          3. Section 393: Meaning of “freehold interest”, “lease”,

      7. Part 5: Mineral extraction allowances

        1. Overview

        2. History

        3. Structure of this Part

          1. Chapter 1: Introduction

            1. Overview

              1. Section 394: Mineral extraction allowances

              2. Section 395: Qualifying expenditure

              3. Sections 396 and 397: Meaning of “mineral exploration and access” and “mineral asset”

              4. Section 398: Relationship between main types of qualifying expenditure

              5. Section 399: Expenditure excluded from being qualifying expenditure

          2. Chapter 2: Qualifying expenditure on mineral exploration and access

            1. Overview

              1. Section 400: Qualifying expenditure on mineral exploration and access

              2. Section 401: Pre-trading exploration expenditure

              3. Section 402: Pre-trading expenditure on plant or machinery

          3. Chapter 3: Qualifying expenditure on acquiring a mineral asset

            1. Overview

              1. Section 403: Qualifying expenditure on acquiring a mineral asset

              2. Section 404: Exclusion of undeveloped market value of land

    18. Example

      1. Section 405: Qualifying expenditure where buildings or structures cease to be used

    19. Example

      1. Section 406: Reduction where premium relief previously allowed

      2. Chapter 4: Qualifying expenditure: second-hand assets

        1. Overview

          1. Section 407: Acquisition of mineral asset owned by previous trader

    20. Example

      1. Section 408: Acquisition of oil licence from non-trader

      2. Section 409: Acquisition of other assets from non-traders

      3. Section 410: UK oil licence: limit is original licence payment

      4. Section 411: Assets generally: limit is residue of previous trader’s qualifying expenditure

      5. Section 412: Transfers of mineral assets within group: limit is initial group expenditure

      6. Section 413: Transfers of mineral assets within group: supplementary

      7. Chapter 5: Other kinds of qualifying expenditure

        1. Overview

          1. Section 414: Expenditure on works likely to become valueless

          2. Section 415: Contribution to buildings or works for benefit of employees abroad

          3. Section 416: Expenditure on restoration within 3 years of ceasing to trade

      8. Chapter 6: Allowances and charges

        1. Overview

          1. Section 417: Determination of entitlement or liability

          2. Section 418: Amount of allowances and charges

          3. Section 419: Unrelieved qualifying expenditure

          4. Section 420: Meaning of “disposal receipt”

          5. Section 421: Disposal of, or ceasing to use, asset

          6. Section 422: Use of asset otherwise than for permitted development

          7. Section 423: Sections 421 and 422: amount of disposal value to be brought into account

          8. Section 424: Disposal value restricted in case of interest in land

          9. Section 425: Receipt of capital sum

          10. Section 426: Pre-trading expenditure

          11. Sections 427 to 431

      9. Chapter 7: Supplementary provisions

        1. Overview

          1. Section 432: Giving effect to allowances and charges

          2. Section 433: Treatment of demolition costs

          3. Section 434: Time when expenditure incurred

          4. Section 435: Share in assets

          5. Section 436: Meaning of “development”

      10. Part 6: Research and development allowances

        1. Overview

        2. History

          1. Chapter 1: Introduction

            1. Overview

              1. Section 437: Research and development allowances

              2. Section 438: Expenditure on research and development

          2. Chapter 2: Qualifying expenditure

            1. Overview

              1. Section 439: Qualifying expenditure

              2. Section 440: Excluded expenditure: land

          3. Chapter 3: Allowances and charges

            1. Overview

              1. Section 441: Allowances

              2. Section 442: Balancing charges

              3. Section 443: Disposal values and disposal events

              4. Section 444: Disposal events: chargeable period for which disposal value is to be brought into account

              5. Section 445: Costs of demolition

          4. Chapter 4: Additional VAT liabilities and rebates

            1. Overview

              1. Section 446: Introduction

              2. Section 447: Additional VAT liability treated as additional expenditure

              3. Section 448: Additional VAT rebate generates disposal value

              4. Section 449: Effect on balancing charges of additional VAT rebates in earlier chargeable periods

          5. Chapter 5: Supplementary provisions

            1. Section 450: Giving effect to allowances and charges

            2. Section 451: Sales: time of cessation of ownership

      11. Part 7: Know-how allowances

        1. Overview

        2. History

        3. Structure of this Part

          1. Chapter 1: Introduction

            1. Overview

              1. Section 452: Know-how allowances

              2. Section 453: Know-how as property

          2. Chapter 2: Qualifying expenditure

            1. Overview

              1. Section 454: Qualifying expenditure

              2. Section 455: Excluded expenditure

          3. Chapter 3: Allowances and charges

            1. Overview

              1. Section 456: Pooling of expenditure

              2. Section 457: Determination of entitlement or liability

              3. Section 458: Amount of allowances and charges

              4. Section 459: Available qualifying expenditure

              5. Section 460: Allocation of qualifying expenditure to pools

              6. Section 461: Unrelieved qualifying expenditure

              7. Section 462: Disposal values

              8. Section 463: Giving effect to allowances and charges

      12. Part 8: Patent allowances

        1. Overview

        2. History

        3. Structure of this Part

          1. Chapter 1: Introduction

            1. Overview

              1. Section 464: Patent allowances

              2. Section 465: Future patent rights

              3. Section 466: Grant of licences

          2. Chapter 2: Qualifying expenditure

            1. Overview

              1. Section 467: Qualifying expenditure

              2. Section 468: Qualifying trade expenditure

              3. Section 469: Qualifying non-trade expenditure

          3. Chapter 3: Allowances and charges

            1. Overview

              1. Section 470: Pooling of expenditure

              2. Section 471: Determination of entitlement or liability

              3. Section 472: Amount of allowances and charges

              4. Section 473: Available qualifying expenditure

              5. Section 474: Allocation of qualifying expenditure to pools

              6. Section 475: Unrelieved qualifying expenditure

              7. Section 476: Disposal value of patent rights

              8. Section 477: Limit on amount of disposal value

          4. Chapter 4: Giving effect to allowances and charges

            1. Overview

              1. Section 478: Persons having qualifying trade expenditure

              2. Section 479: Persons having qualifying non-trade expenditure: income tax

              3. Section 480: Persons having qualifying non-trade expenditure: corporation tax

          5. Chapter 5: Supplementary provisions

            1. Overview

              1. Section 481: Anti-avoidance: limit on qualifying expenditure

              2. Section 482: Sums paid for Crown use treated as paid under licence

              3. Section 483: Meaning of “income from patents”

      13. Part 9: Dredging allowances

        1. Overview

        2. Background

        3. History

          1. Section 484: Dredging allowances

          2. Section 485: Qualifying expenditure

          3. Section 486: Pre-trading expenditure of qualifying trades,

          4. Section 487: Writing-down allowances

          5. Section 488: Balancing allowances

          6. Section 489: Giving effect to allowances

      14. Part 10: Assured tenancy allowances

        1. Overview

        2. History

        3. Structure of this Part

          1. Chapter 1: Introduction

            1. Section 490: Assured tenancy allowances

            2. Section 56(1) of the Housing Act 1980 (repealed with savings by the Housing Act 1988)

            3. Section 1(1) of the Housing Act 1988

            4. Section 18(1) of the Rent Act 1977

            5. Section 86(1) of the Rent Act 1977

            6. Section 56(4) of the Housing Act 1980 (repealed with savings by the Housing Act 1988)

            7. Section 491: Allowances available in relation to old expenditure only

            8. Section 492: Meaning of “approved body”

            9. Section 493: Expenditure on the construction of a building

          2. Chapter 2: The relevant interest

            1. Section 494: Introduction

            2. Section 495: General rule as to what is the relevant interest in the building

            3. Section 496: Interest acquired on completion of construction

            4. Section 497: Effect of creation of subordinate interest

            5. Section 498: Merger of leasehold interest

            6. Section 499: Provisions applying on termination of lease

            7. Section 500: The relevant interest in the dwelling-house

          3. Chapter 3: Qualifying expenditure

            1. Section 501: Capital expenditure on construction

            2. Section 502: Purchase of unused dwelling-house used where developer not involved

            3. Section 503: Purchase of dwelling-house sold unused by developer

          4. Chapter 4: Qualifying dwelling-houses

            1. Section 504: Requirements relating to the landlord

            2. Section 505: Qualifying dwelling-houses: exclusions

            3. Section 506: Dwelling-house ceasing to be qualifying dwelling-house

          5. Chapter 5: Writing-down allowances

            1. Section 507: Entitlement to writing-down allowance

            2. Section 508: Basic rule for calculating amount of allowance

            3. Section 509: Calculation of allowance after sale of relevant interest

            4. Section 510: Allowance limited to residue of qualifying expenditure attributable to dwelling-house

            5. Section 511: Qualifying expenditure attributable to dwelling-house

            6. Section 512: Residue of qualifying expenditure attributable to dwelling-house

          6. Chapter 6: Balancing adjustments

            1. Section 513: When balancing adjustments are made

            2. Section 514: Balancing events

            3. Section 515: Proceeds from balancing events

            4. Section 516: Dwelling-house a qualifying dwelling-house throughout

            5. Section 517: Dwelling-house not a qualifying dwelling-house throughout

            6. Section 518: Overall limit on balancing charge

            7. Section 519: Recovery of old initial allowances made on incorrect assumptions

            8. Section 520: The relevant period of ownership

            9. Section 521: Starting expenditure

            10. Section 522: Adjusted net cost

          7. Chapter 7: Writing off qualifying expenditure attributable to dwelling-house

            1. Section 523: Introduction

            2. Section 524: Writing off initial allowances

            3. Section 525: Writing off writing-down allowances

            4. Section 526: Writing off expenditure for periods when building not used as qualifying dwelling-house

            5. Section 527: Writing off or increase of expenditure where balancing adjustment made

            6. Section 528: Treatment of demolition costs

          8. Chapter 8: Supplementary provisions

            1. Section 529: Giving effect to allowances and charges

            2. Section 530: Apportionment of sums partly referable to non-qualifying assets

            3. Section 531: Meaning of “dwelling-house”, “lease”

      15. Part 11: Contributions

        1. Overview

        2. Background

          1. Chapter 1: Exclusion of expenditure met by contributions

            1. Overview

              1. Section 532: The general rule excluding contributions

              2. Section 533: Exclusion of contributions to dredging

              3. Section 534: Northern Ireland regional development grants

              4. Section 535: Insurance or compensation money

              5. Section 536: Contributions not made by public bodies and not eligible for tax relief

          2. Chapter 2: Contribution allowances

            1. Overview

              1. Section 537: Conditions for contribution allowances under Parts 2 to 5

              2. Section 538: Plant and machinery

              3. Section 539: Industrial buildings

    21. Example

      1. Section 540: Agricultural buildings

      2. Section 541: Mineral extraction

      3. Section 542: Transfer of C’s trade or relevant activity

      4. Section 543: Contribution allowances under Part 9

      5. Part 12: Supplementary provisions

        1. Overview

          1. Chapter 1: Life assurance business

            1. Overview

              1. Section 544: Management assets

              2. Section 545: Investment assets

          2. Chapter 2: Additional VAT liabilities and rebates: interpretation,

            1. Overview

        2. Background

          1. Section 546: Introduction

          2. Section 547: “Additional VAT liability” and “additional VAT rebate”

          3. Sections 548 and 549: Time when additional VAT liability or rebate is incurred, made, accrues

          4. Section 550: Apportionment of additional VAT liabilities and rebates

          5. Section 551: Supplementary

          6. Chapter 3: Disposals of oil licences: Provisions relating to Parts 5 and 6

            1. Overview

              1. Section 552: Meaning of “oil licence” and “interest in an oil licence”

              2. Section 553: Consideration to be treated as nil

              3. Section 554: Circumstances in which oil licence relates to undeveloped area

              4. Section 555: Disposal of oil licence with exploitation value

              5. Section 556: Minor definitions

          7. Chapter 4: Partnerships, successions and transfers

            1. Overview

        3. Background

          1. Section 343 Company reconstructions without a change of ownership

          2. Section 557: Application of sections 558 and 559

          3. Section 558: Effect of partnership changes

          4. Section 559: Effect of successions

          5. Section 560: Transfer of insurance company business

          6. Section 561: Transfer of a UK trade to a company in another member State

          7. Chapter 5: Miscellaneous

            1. Overview

              1. Section 562: Apportionment where property sold together

              2. Section 563: Procedure for determining certain questions affecting two or more persons

              3. Section 564 Questions to which procedure in section 563 applies

              4. Section 565: Tax agreements for income tax purposes

              5. Section 566: Companies not resident in the United Kingdom

              6. Section 567: Sales treated as being for alternative amount: introductory

              7. Section 568: Sales treated as being at market value

              8. Section 569: Election to treat sale as being for alternative amount

              9. Section 570: Elections: supplemental

          8. Chapter 6: Final Provisions

            1. Overview

              1. Section 571: Application of Act to parts of assets

              2. Section 572: References to sale of property and time of sale

              3. Section 573: Transfers treated as sales

              4. Section 574: Meaning of “control”

              5. Section 575: Connected persons

              6. Section 839 of ICTA (Connected persons)

              7. Section 576: Meaning of “the Inland Revenue”

              8. Section 577: Other definitions

              9. Section 578: Consequential amendments

              10. Section 579: Commencement and transitional provisions and savings

              11. Section 580: Repeals

              12. Section 581: Citation

      6. Schedule 1: Index of defined expressions

      7. Schedule 2: Consequential amendments

        1. Paragraph 1

        2. Paragraph 4

        3. Paragraphs 13 and 14

        4. Paragraphs 16 and 17

        5. Paragraphs 22 and 23

        6. Paragraph 25

        7. Paragraph 30

        8. Paragraph 32

        9. Paragraph 38

        10. Paragraph 39

        11. Paragraph 40

        12. Paragraph 42(3)

        13. Paragraph 44

        14. Paragraph 45

        15. Paragraph 46

        16. Paragraph 47

        17. Paragraphs 48 to 50

        18. Paragraph 51

        19. Paragraph 52

        20. Paragraph 61

        21. Paragraph 62

        22. Paragraph 64

        23. Paragraphs 75 and 76

        24. Paragraphs 77 and 79

        25. Paragraph 82

        26. Paragraph 105

        27. Paragraph 108

      8. Schedule 3: Transitionals and savings

        1. Paragraphs 1 to 7

        2. Paragraph 8

        3. Paragraph 24

        4. Paragraph 46 to 51

        5. Paragraph 55

        6. Paragraph 88

        7. Paragraph 94

        8. Paragraph 98

      9. Schedule 4: Repeals

  5. Commencement

  6. Hansard References

  • Explanatory Notes Table of contents

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