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Capital Allowances Act 2001

Section 218: Restriction on B’s qualifying expenditure

796.These sections are based on sections 75(1), (2) and (3) and 76(2), (4) and (7) of CAA 1990. They restrict the buyer’s allowances if a relevant transaction is within sections 214 to 216:

  • section 217 denies the buyer first-year allowances; and

  • section 218 restricts the buyer’s qualifying expenditure. This stops a buyer getting more capital allowances by, for example, paying a connected person over the odds for plant or machinery.

797.But if the transaction is a sale and finance leaseback sections 223 to 225 apply instead.

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