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Capital Allowances Act 2001

Section 404: Exclusion of undeveloped market value of land

1398.This section is based on part of section 110 of CAA 1990. It prevents the underlying value of land from being qualifying expenditure.

  • Example

  • Assume this section applies to the purchase by B of an interest in land for £1,000. The land would be worth £200 if there were no mineral deposits in the land.

  • Subsection (1) stops £200 from being qualifying expenditure.

  • The remaining £800 might be qualifying expenditure but other provisions in this and the next Chapter might mean that the qualifying expenditure is less than £800.

1399.Subsection (1) omits the reference in section 110(1) of CAA 1990 to the land including a source of mineral deposits as that follows from the requirement that the interest in the land is a mineral asset.

1400.Subsection (5)(b) contains a test by reference to general development orders in England; section 110(3)(b) of CAA 1990 refers to Wales as well. This change has no practical effect at present. See Change 48 in Annex 1.

1401.Subsection (7) deals with something that is not explicit in CAA 1990. If A transfers a mineral asset to B and they successfully elect to treat B as acquiring the mineral asset on a “step-in-shoes basis” from A then this section does not require B to reduce that “step-in-shoes basis”.

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