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Capital Allowances Act 2001

Chapter 1: Introduction
Overview

1239.Chapter 1 outlines the conditions for agricultural buildings allowances and the persons who may claim them. It introduces some of the terms employed subsequently in Part 4.

1240.Section 361 sets out the basic requirements and defines two key terms used in Part 4, “agricultural building” and “the related agricultural land”.

1241.Section 362 defines “husbandry” to include intensive farming and the cultivation of short rotation coppice.

1242.Section 363 excludes expenditure on land from agricultural buildings allowances.

Section 361: Agricultural buildings allowances

1243.This section is based on parts of sections 123, 124(1), 125(1) and section 133(1) of CAA 1990. It sets out the basic conditions for agricultural buildings allowances.

1244.Subsection (1):

  • includes a minor change. This is to avoid the use of “farm buildings” which does not capture accurately the fact that agricultural buildings allowances are given also for such things as short rotation coppicing. See Change 41 in Annex 1; and

  • refers to “land in the United Kingdom” instead of “agricultural land” which CAA 1990 goes on to define as “land, houses or other buildings in the United Kingdom”. This is simpler because the Interpretation Act 1978 gives “land” a meaning which includes buildings in any event. See Note 48 in Annex 2.

1245.Subsection (2) gives the meanings of two terms used in Part 4. “The related agricultural land” is an important concept in determining who is entitled to agricultural buildings allowances at any given time. Broadly speaking, allowances go with the related agricultural land.

1246.Subsection (3) provides that the person who has the relevant interest in relation to the qualifying expenditure is entitled to allowances. “Relevant interest” is explained in Chapter 2 and “qualifying expenditure” in Chapter 3.

Section 362: Meaning of “husbandry”

1247.This section is based on parts of section 133(1) of CAA 1990 and of section 154(1) and (3) of FA 1995. It widens the meaning of “husbandry”.

1248.The meaning of “husbandry” has been examined by the courts on several occasions over the years. Other words which might appear more user-friendly, for example “farming” or “agriculture”, could not be used without changing the scope of agricultural buildings allowances in ways which would be uncertain.

1249.Section 154(1) of FA 1995 provides that for the purposes of the Tax Acts and the Taxation of Chargeable Gains Act 1992 the cultivation of short rotation coppice is to be regarded as farming, husbandry or agriculture but not as forestry. Agricultural buildings allowances make use of the definition in section 154(3) of FA 1995:

  • “short rotation coppice” means a perennial crop of tree species planted at high density, the stems of which are harvested above ground level at intervals of less than ten years.

Section 363: Expenditure on the construction of a building

1250.This section is based on section 133(6) of CAA 1990. It excludes from agricultural buildings allowances expenditure on the acquisition of land or of rights in or over land. As in other Parts, allowances are only given for what depreciates – in this case expenditure on the construction of a building.

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