Finance (No. 2) Act 2017

TCGA 1992

45 (1) Section 41 (restriction of losses by reference to capital allowances etc) is amended as follows.

(2) In subsection (4), after paragraph (a) insert—

“(zaa) any deduction allowable in respect of capital expenditure in calculating profits on the cash basis (see sections 33A and 307B of ITTOIA 2005),”.

(3) After subsection (6) insert—

“(6A) Where—

(a) capital allowances have been made or may be made in respect of expenditure, and

(b) the capital allowances include a deduction mentioned in subsection (4)(zaa),

the capital allowances to be taken into account under this section are to be regarded as equal to the total amount of expenditure which has qualified for capital allowances less any balancing charge to which the person making the disposal is liable under the Capital Allowances Act.”

(4) In subsection (7), after “Capital Allowances Act,” insert “and subsection (6A) does not apply,”.

(5) After subsection (8) insert—

“(9) In this section—

(a) in relation to a trade, profession or vocation, references to calculating profits on the cash basis are to calculating the profits of a trade, profession or vocation in relation to which an election under section 25A of ITTOIA 2005 (cash basis for trades) has effect, and

(b) in relation to a property business, references to calculating profits on the cash basis are to be construed in accordance with section 271D of that Act (calculation of profits of property businesses on the cash basis).

(10) In this section—

• “capital expenditure” means expenditure of a capital nature incurred on, or in connection with, the creation, construction, acquisition, alteration or disposal of an asset, and

• “property business” means a UK property business or an overseas property business within the meaning of Part 3 of ITTOIA 2005 (see sections 264 and 265 of that Act).”