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Capital Allowances Act 2001

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

1424.This section is based on sections 113 and 114 of CAA 1990. It prevents an increase in qualifying expenditure if the trader acquires an asset that, broadly, has previously been owned by another mineral extraction trader for the purposes of that earlier owner’s mineral extraction trade. The qualifying expenditure on acquiring the asset is limited to the residue of the previous trader’s qualifying expenditure.

  • Example

  • Assume that:

    • mineral extraction trader, B, buys a mineral asset for £1,000;

    • the mineral asset was previously owned by a previous trader, P; and

    • P’s residue of qualifying expenditure related to the asset is £500.

  • B’s qualifying expenditure cannot exceed £500.

1425.Subsection (8) makes it explicit that the cap does not affect any part of the expenditure that is treated as qualifying expenditure on mineral exploration and access by the first two sections in this Chapter.

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