Explanatory Notes

Capital Allowances Act 2001

2001 CHAPTER 2

22nd March 2001

Commentary on Sections

Glossary

Part 2: Plant and machinery allowances
Chapter 11: Overseas leasing
Section 111: Excess allowances: standard recovery mechanism

462.This section is based on section 46(1) to (4) and (8) of CAA 1990. It recovers allowances if:

463.The section broadly withdraws the difference between:

464.It does so by imposing a balancing charge and requiring a disposal value. In broad terms:

465.But in the next chargeable period it allocates to an appropriate pool the total of the allowances withdrawn and the expenditure taken out of the original pool. The net effect of this is broadly that the expenditure is still relieved in full but at a slower rate – as it would have been if the 10% rate had applied from the outset.