Capital Allowances Act 1990 (repealed)

Chapter I U.K. Allowances and Charges: General Provisions

Modifications etc. (not altering text)

C2 Pt. II modified (19.9.1994) by Coal Industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 22; S.I. 1994/2189, art. 2, Sch.

C5 Pt. II Chapter I (ss. 22–29) modified (31.5.1991) by Environmental Protection Act 1990 (c.43), s. 32(6), Sch. 2 para. 9(2)

22 First-year allowances: transitional relief for regional projects. U.K.

(1) Subject to the provisions of this Part, where—

(a) a person carrying on a trade incurs capital expenditure to which this section applies on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and

(b) in consequence of his incurring the expenditure, the machinery or plant belongs to him at some time during the chargeable period related to the incurring of the expenditure,

there shall be made to him for that period an allowance (“a first-year allowance") which [F1 , in the case of expenditure to which this section applies by virtue only of subsection (3B) below, shall be of an amount equal to 40 per cent. of that expenditure and, in any other case,]shall be of an amount equal to the whole of that expenditure.

F2 [(1A) Subsection (1B) below applies in any case where a person—

(a) has at any time incurred, as mentioned in paragraphs (a) and (b) of subsection (1) above, capital expenditure to which this section applies, and

(b) subsequently incurs an additional VAT liability in respect of that capital expenditure at a time when the machinery or plant is provided wholly and exclusively for the purposes of the trade.

(1B) Where this subsection applies, then, for the purposes of this Act—

(a) the additional VAT liability shall be regarded as capital expenditure incurred by the person on the provision of the machinery or plant wholly and exclusively for the purposes of the trade, and

(b) that capital expenditure shall be regarded as expenditure in consequence of the incurring of which the machinery or plant belongs, or has belonged, to him at some time during the chargeable period related to the incurring of the capital expenditure,

and, subject to the following provisions of this Act, a first-year allowance shall accordingly be made to him under subsection (1) above for the chargeable period related to the incurring of that liability.]

(2) This section applies to so much of any expenditure as is certified by the Secretary of State for the purposes of this section to be expenditure which, in his opinion, qualifies for a regional development grant or a grant under Part IV of the relevant Order and consists of the payment of sums on a project—

(a) either in an area which on 13th March 1984 was a development area, within the meaning of the M1 Industrial Development Act 1982, or in Northern Ireland; and

(b) in respect of which a written offer of financial assistance under section 7 or 8 of that Act was made on behalf of the Secretary of State in the period beginning on 1st April 1980 and ending on 13th March 1984 or in respect of which a written offer of financial assistance was made in that period by the Highlands and Islands Development Board.

(3) This section applies to so much of any expenditure as is certified by the Department of Economic Development in Northern Ireland for the purposes of this section to be expenditure which, in the opinion of that Department, qualifies for a grant under Part IV of the relevant Order and consists of the payment of sums on a project—

(a) in Northern Ireland; and

(b) in respect of which a written offer of financial assistance under Article 7 or 8 of the relevant Order was made on behalf of a Department of the Government of Northern Ireland in the period beginning on 1st April 1980 and ending on 13th March 1984 or in respect of which a written offer of financial assistance was made in that period by the Local Enterprise Development Unit.

F3 [(3A) This section also applies to any additional VAT liability incurred in respect of expenditure certified under subsection (2) or (3) above.]

F4 [(3B) This section applies to—

(a) any expenditure which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by any person in the period beginning with 1st November 1992 and ending with 31st October 1993; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.]

(4) Subject to the following provisions of this section, no first-year allowance shall be made in respect of any expenditure—

(a) if the chargeable period related to the incurring of the expenditure is also the chargeable period related to the permanent discontinuance of the trade; or

(b) incurred on the provision of a motor car; or

(c) subject to subsections (5), (6) [F5 (6A)]and (11) below, on the provision of machinery or plant for leasing, whether in the course of a trade or otherwise, unless it appears that the machinery or plant will be used for a qualifying purpose in the requisite period and will not at any time in that period be used for any other purpose;

and section 50 shall apply for the interpretation of paragraph (c) above as it applies for the interpretation of Chapter V of this Part.

(5) Paragraph (c) of subsection (4) above does not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building or structure if section 1 would apply to expenditure incurred at that time on the construction of that building or structure.

(6) Nothing in paragraph (c) of subsection (4) above affects expenditure on the provision of vehicles if they are provided wholly or mainly for the use of persons in receipt of—

(a) [F6 a disability living allowance under the [F7 Social Security Contributions and Benefits Act 1992][F8 or the [F9 Social Security Contributions and Benefits (Northern Ireland) Act 1992]] by virtue of entitlement to the mobility component]. . .; or

(b) a mobility supplement under a scheme made under the M2 Personal Injuries (Emergency Provisions) Act 1939; or

(c) a mobility supplement under an Order in Council made under section 12 of the M3 Social Security (Miscellaneous Provisions) Act 1977; or

(d) any payment appearing to the Treasury to be of a similar kind and specified by them by order.

F10 [(6A) Paragraph (c) of subsection (4) above does not apply to expenditure to which this section applies by virtue only of subsection (3B) above; but (subject to section 43) no first-year allowance shall be made by virtue of subsection (3B) above in respect of any expenditure on the provision of machinery or plant for leasing if—

(a) it appears that the expenditure is such that section 42 would have effect with respect to it; or

(b) each of the following conditions is satisfied, that is to say—

(i) the expenditure is incurred on or after 14th April 1993;

(ii) the expenditure is expenditure in respect of which paragraph (c) of subsection (4) above would, if it applied, prevent the making of any first year allowance; and

(iii) the person to whom the machinery or plant is to be or is leased, or a person who (within the meaning of section 839 of the principal Act) is connected with that person, used the machinery or plant for any purpose at any time before its provision for leasing.]

[F11 (7) A claim for one or more first-year allowances to be made for any chargeable period may require that the amount of the allowance, or aggregate amount of the allowances, be reduced to an amount specified in that behalf in the claim.]

(8) No F12 ... claim under subsection (7) above may be made in respect of any ship.

F13 (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) In this section—

• “regional development grant” means a grant under Part II of the M4 Industrial Development Act 1982;

• “the relevant Order” means the M5 Industrial Development (Northern Ireland) Order 1982;

and any reference to a particular provision of that Act or Order includes a reference to the corresponding provision of any Act or Order which was in force before and repealed by the Industrial Development Act 1982 or the Industrial Development (Northern Ireland) Order 1982.

(11) Where expenditure is incurred on the provision of machinery or plant which is fixed to a building or land of which the person who incurs the expenditure is the lessor and the circumstances are such that a transfer of his interest in the building or land would operate to transfer his interest in the machinery or plant, then subsection (4)(c) above shall not preclude the making of a first-year allowance in respect of such expenditure.

Textual Amendments

F1 Words in s. 22(1) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(1)(5)

F2 S. 22(1A)(1B) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 6(1).

F3 S. 22(3A) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 6(2).

F4 S. 22(3B) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(2)(5)

F5 Words in s. 22(4)(c) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(3)(5)

F6 Words in s. 22(6)(a) substituted (6.4.1992) by Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4, Sch. 2, para. 20; S.I. 1991/2617, art. 2(f)

F7 Words in s. 22(6)(a) substituted (1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 4, 7(2), Sch. 2 para. 109(a)

F8 Words in s. 22(6)(a) inserted (6.4.1992) by S.I.1991/2874, art. 6(2)(a); S.R. 1992/94, art. 2.

F9 Words in s. 22(6)(a) substituted (1.7.1992) by Social Security (Consequential Provisions)(Northern Ireland) Act 1992 (c. 9), ss. 4, 7(2), Sch. 2 para. 38(a).

F10 S. 22(6A) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 113(3)(5)

F11 S. 22(7) substituted by Finance Act 1990 (c. 29), s. 103, Sch. 17 para. 3(2)

F12 Words in s. 22(8) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 3(3), Sch. 19 Pt. V, Note 6

F13 S. 22(9) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 3(4), Sch. 19 Pt. V, Note 6

Modifications etc. (not altering text)

C6 S. 22 restricted (3.5.1994) by Finance Act 1994 (c. 9), s. 118(1)(a)

Marginal Citations

M1 1982 c. 52.

M2 1939 c. 82.

M3 1977 c. 5.

M4 1982 c. 52.

M5 S.I. 1982/1083 (N.I.15).

23 Information relating to first-year allowances. U.K.

(1) A claim F14 ... for a first-year allowance in respect of expenditure to which section 22(4)(c) applies F14 ... shall be accompanied by a certificate—

(a) stating that the machinery or plant in question will be used for a qualifying purpose in the requisite period, will not be used for any other purpose and has not been used for any other purpose in any part of that period which has already elapsed; and

(b) containing a description of the machinery or plant in question or, if the claim F15 ... relates to more than one item of machinery or plant and those items are of different kinds, a description of the different kinds and the amount claimed or deducted in respect of each of them; and

(c) where the claim F15 ... relates to a first-year allowance which by virtue of section 45(2) is in respect of part only of any expenditure, containing a statement of the extent to which the profits or gains referred to in section 45(2) will be chargeable to tax as there mentioned.

(2) Where a person F16 ... has claimed a first-year allowance in respect of any expenditure F16 ... and the machinery or plant in question is at any time in the requisite period used otherwise than for a qualifying purpose, the person to whom it then belongs shall give notice of that fact to the inspector, specifying the use to which the machinery or plant has been put; and, subject to subsection (3) below, any such notice shall—

(a) be given within three months after the end of the chargeable period F17 ... in which the machinery or plant is first used otherwise than for a qualifying purpose; and

(b) relate to all the items of machinery or plant (if more than one) in respect of which that person is required to give notice under this subsection in respect of that period.

In this subsection the reference to machinery or plant being used otherwise than for a qualifying purpose shall include a reference to machinery or plant being treated as so used by virtue of section 45(4).

(3) If, at the end of the three months mentioned in subsection (2)(a) above, the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that subsection has been used otherwise than for a qualifying purpose, he shall in respect of that item give the notice within 30 days of his coming to know that it has been so used.

(4) Where a first-year allowance has been made in respect of any expenditure, the inspector may by notice require—

(a) any person to whom the machinery or plant belongs or has belonged, or who is or has been in possession of it under a lease, during the requisite period; and

(b) the personal representatives of any such person,

to furnish him, within such period (not being less than 30 days) as may be specified in the notice, with such information as he may require and the person to whom the notice is addressed has or can reasonably obtain about the leasing of the machinery or plant or the use to which it is being or has been put.

(5) The obligation to give notice by virtue of subsection (2) or (3) above where the machinery or plant becomes used otherwise than for a qualifying purpose shall arise a second time when the machinery or plant becomes used—

(a) otherwise than for a qualifying purpose, and

(b) for the purpose of being leased to such a person as is referred to in section 42(1)(a) and (b),

(if it were not so used before).

(6) Section 50 shall apply for the interpretation of this section as it applies for the interpretation of Chapter V of this Part [F18 and references in this section to a first-year allowance shall not include references to a first-year allowance in respect of expenditure to which section 22 applies by virtue only of subsection (3B) of that section.]

Textual Amendments

F14 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(2), Sch. 19 Pt. V, Note 6

F15 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(2), Sch. 19 Pt. V, Note 6

F16 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(3), Sch. 19 Pt. V, Note 6

F17 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F18 Words in s. 23(6) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115, Sch. 13 para.2

24 Writing-down allowances and balancing adjustments. U.K.

(1) Subject to the provisions of this Part, where—

(a) a person carrying on a trade has incurred capital expenditure on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and

(b) in consequence of his incurring that expenditure, the machinery or plant belongs or has belonged to him,

allowances and charges shall be made to and on him in accordance with the following provisions of this section.

F19 [(1A) If, in a case where the circumstances are as mentioned in paragraphs (a) and (b) of subsection (1) above, the person there mentioned incurs an additional VAT liability in respect of the capital expenditure at a time when the machinery or plant is provided wholly and exclusively for the purposes of the trade, then, for the purposes of this Act—

(a) that liability shall be regarded as capital expenditure incurred by him on the provision of the machinery or plant wholly and exclusively for the purposes of the trade, and

(b) that capital expenditure shall be regarded as expenditure in consequence of the incurring of which the machinery or plant belongs, or has belonged, to him,

and, subject to the following provisions of this Act, subsection (1) above shall have effect accordingly in relation to the capital expenditure constituted by that liability.]

(2) Subject to subsection (3) below, for any chargeable period for which a person within subsection (1) above has qualifying expenditure which exceeds any disposal value to be brought into account in accordance with subsection (6) below, there shall be made to him —

(a) unless the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a writing-down allowance") equal to—

(i) 25 per cent. of the excess, or

[F20 (ii) a proportionately reduced or, as the case may require, increased percentage of the excess if the period is a period of less or more than a year, or the trade has been carried on for part only of the period;]

(b) if the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a balancing allowance") equal to the whole of the excess.

(3) A claim for a writing-down allowance to be made for any chargeable period F21 ... may require that the amount of the allowance be reduced to an amount specified in that behalf in the claim.

F22 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For any chargeable period for which a person’s qualifying expenditure is less than the disposal value which he is to bring into account, there shall be made on him a charge (“a balancing charge"), and the amount on which the charge is made shall be an amount equal to the difference.

(6) [F23 Subject to [F24 subsections (6A) and (7)] below,] the disposal value to be brought into account by a person for any chargeable period is the disposal value of all machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and

(b) which belongs to him at some time in the chargeable period F17 ... ; and

(c) in respect of which, in the chargeable period F17 ... , one of the following events occurs, namely—

(i) the machinery or plant ceases to belong to him;

(ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent or, in the case of machinery or plant which was in use for mineral exploration and access, he abandons the machinery or plant at the site where it was in use for that purpose;

(iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise);

(iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade;

(v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued);

and that is the first such event to occur;

but this subsection shall not require a person to bring into account the disposal value of any machinery or plant which he disposes of by way of gift in such circumstances that there is a charge to tax under Schedule E.

[F25 (6A) In the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, the disposal value to be brought into account by a person for any chargeable period by virtue of subsection (6) above shall also include the disposal value of all such machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure;

(b) which belongs to him at some time in the chargeable period F17 ... ;

(c) in respect of which, in the chargeable period F17 ... , the following event occurs, namely, he grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum; and

(d) in respect of which, whilst the machinery or plant belongs or belonged to him, no event falling within paragraph (iv) or (v) of subsection (6)(c) above has occurred before the event referred to in paragraph (c) above.]

[F26 (7) This subsection applies to all machinery and plant—

(a) on the provision of which for the purposes of the trade a person has incurred capital expenditure;

(b) which belongs to him at some time in a chargeable period F17 ... ; and

(c) in respect of which the following event occurs, namely, the making of an additional VAT rebate to him in that chargeable period F17 ... in respect of the capital expenditure incurred by him on the provision of the machinery or plant;

and where this subsection applies to any machinery or plant the amount that is to be brought into account by virtue of subsection (6) above by that person for the chargeable period related to the making of the rebate shall be increased by the addition of (or, if there would not otherwise be a disposal value for that chargeable period, shall be) the disposal value of the machinery or plant in respect of which that rebate is made.

(8) Except in [F24 subsections (6A) and (7)] above, any reference in this Act to subsection (6) above (but not a reference to any specific provision of it) shall be taken to include a reference to [F24 subsections (6A) and (7)] above.]

Textual Amendments

F17 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F19 S. 24(1A) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), S. 59, Sch. 14 Pt. II para. 7(1).

F20 S. 24(2)(a)(ii) substituted (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(4)

F21 Words in s. 24(3) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(2), Sch. 19 Pt. V, Note 6

F22 S. 24(4) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(3), Sch. 19 Pt. V, Note 6

F23 Words in s. 24(6) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

F24 Words in s. 24(6)(8) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(2)(4)(9).

F25 S. 24(6A) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(3)(9).

F26 S. 24(7)(8) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

Modifications etc. (not altering text)

C7 S. 24 restricted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 59, Sch. 10 paras. 9(3), 11(6), 13.

C8 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(4)

C9 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(3)

25 Qualifying expenditure. U.K.

(1) Subject to subsections (2) to (9) below, for the purposes of section 24, a person’s qualifying expenditure for a chargeable period is the aggregate of the following amounts—

(a) the balance remaining after deducting any first-year allowances made in respect thereof of any capital expenditure incurred by him on the provision for the purposes of the trade of machinery or plant being expenditure incurred in the chargeable period in question F17 ... or at any previous time, and not being—

(i) expenditure which, or any part of which, has formed part of his qualifying expenditure for any previous chargeable period, or

(ii) expenditure in respect of which a first-year allowance is or could (assuming a claim therefor F27 ... ) be made for the chargeable period in question; and

(b) if for the chargeable period immediately preceding the chargeable period in question there was an excess of qualifying expenditure over disposal value, the balance of that excess after deducting any writing-down allowance made by reference thereto.

F28 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In any case where—

(a) a person carrying on a trade F29 ... incurs capital expenditure on the provision of machinery or plant for the purposes of the trade, and

(b) if a claim were made in that behalf, a first-year allowance would fall to be made in respect of that expenditure for the chargeable period related to the incurring of it, and

(c) no claim is made but by notice given to [F30 an officer of the Board within the period specified in subsection (3A) below], the person concerned elects that this subsection shall apply,

then, for the purposes of section 24, that expenditure shall not, by virtue of subsection (1)(a)(ii) above, be excluded from the capital expenditure referred to in subsection (1)(a) above.

[F31 (3A) The period mentioned in subsection (3) above is—

(a) for the purposes of income tax, the period ending with the first anniversary of the 31st January next following the year of assessment in which ends the chargeable period related to the incurring of the expenditure;

(b) for the purposes of corporation tax, the period of two years beginning at the end of the chargeable period related to the incurring of the expenditure.]

(4) In any case where—

(a) a person F32 ... carrying on a trade has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, and

(b) a first-year allowance falls to be made to that person in respect of that expenditure (and F33 ... a claim is made for that allowance), and

(c) for the chargeable period related to the incurring of that expenditure, the amount of that first-year allowance or, as the case may be, the aggregate amount of that and other first-year allowances which fall to be made to that person is required to be reduced by virtue of section 22(7) or, in the case of ships, 30(1)(b),

then, for the purposes of section 24, an amount equal to the relevant portion of the expenditure giving rise to the first-year allowance or allowances referred to in paragraph (c) above shall be treated as expenditure in respect of which no first-year allowance is or could be made for the chargeable period in question.

(5) Subject to subsection (6) below, where—

(a) a first-year allowance is made in respect of capital expenditure on the provision of machinery or plant, and

(b) in the chargeable period related to the incurring of that expenditure, the disposal value of that machinery or plant falls to be brought into account in accordance with section 24(6),

that expenditure shall not be virtue of subsection (1)(a)(ii) above be excluded from the capital expenditure referred to in subsection (1)(a) above.

(6) Where the event by reason of which disposal value falls to be brought into account as mentioned in subsection (5) above is the assignment of the benefit of a contract, subsection (1) above, as modified by subsection (5) above, shall have effect as if any reference in paragraph (a) to capital expenditure incurred were a reference to the total capital expenditure which the person in question would have incurred in respect of the machinery or plant if he had wholly performed the contract.

(7) Where an allowance is or has been made under any provision of Part V except section 122 in respect of any capital expenditure, none of that expenditure shall be taken into account in determining qualifying expenditure for the purpose of any allowance or charge under section 24.

This subsection shall not have effect in relation to any chargeable period F17 ... ending after 26th July 1989.

(8) All such assessments and adjustments of assessments shall be made as may be necessary to give effect to subsections (5) and (6) above.

(9) In subsection (4) above “the relevant portion" of expenditure giving rise to a first-year allowance or allowances is that which bears to the whole of that expenditure the same proportion as the amount of the reduction mentioned in subsection (4)(c) above bears to what the amount of the allowance or allowances would have been apart from that reduction.

Textual Amendments

F17 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F27 Words in s. 25(1)(a) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(2), Sch. 19 Pt. V, Note 6

F28 S. 25(2) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(3), Sch. 19 Pt. V, Note 6

F29 Words in s. 25(3)(a) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(4), Sch. 19 Pt. V, Note 6

F30 Words in s. 25(3)(c) substituted (with effect in accordance with s. 135(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 26(2)

F31 S. 25(3A) inserted (with effect in accordance with s. 135(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 26(3)

F32 Words in s. 25(4)(a) repealed by Finance Act 1990 (c. 29), s. 103(1)(2), 132, Sch. 17 para. 6(5)(a), Sch. 19 Pt. V, Note 6

F33 Words in s. 25(4)(b) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(5)(b), Sch. 19 Pt. V, Note 6

Modifications etc. (not altering text)

C10 S. 25(1) modified (3.5.1994) by Finance Act 1994 (c. 9), s. 118(2)(a)(6)

C11 S. 25(3) modified (for the year of assessment 1988-1989) by S.I. 1991/851, regs. 1, 9, Sch. 2

C12 S. 25(3) modified (for the year of assessment 1989-1990) by S.I. 1992/511, regs. 1, 9, Sch.2.

C13 S. 25(3) applied (with modifications) (for the year of assessment 1990–91) by S.I. 1993/415, reg. 9, Sch.2

C14 S. 25(3) modified (for the year of assessment 1991-92) by The Lloyds Underwriters (Tax) (1991-92) Regulations 1994 (S.I. 1994/728), regs. 1(1), 9, Sch. 2

C15 S. 25(3) modified (for the years of assessment 1992-93 and 1993-94) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 14(1), Sch.

C16 S. 25(3) modified (for the year of assessment 1994-95) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 15(1), Sch.

26 The disposal value. U.K.

(1) Subject to subsection (2) below, for the purposes of section 24 the disposal value of any machinery or plant depends upon the event by reason of which it falls to be taken into account and—

(a) unless paragraph (b) below applies, if that event is the sale of the machinery or plant, equals the net proceeds to the person in question of the sale, together with any insurance moneys received by him in respect of the machinery or plant by reason of any event affecting the price obtainable on the sale, and, so far as it consists of capital sums, any other compensation of any description so received,

(b) if that event is the sale of the machinery or plant at a price lower than that which it would have fetched if sold in the open market, and otherwise than in circumstances such that—

(i) the buyer’s expenditure on the acquisition of the machinery or plant can be taken into account in making allowances to him under this Part or under Part VII and the buyer is not a dual resident investing company which is connected with the seller within the terms of section 839 of the principal Act, or

(ii) there is a charge to tax under Schedule E,

equals the price which the machinery or plant would have fetched if sold in the open market,

(c) if that event is the demolition or destruction of the machinery or plant, equals the net amount received by the person in question for the remains of the machinery or plant, together with any insurance moneys received by him in respect of the demolition or destruction and, so far as it consists of capital sums, any other compensation of any description so received,

(d) if that event is the permanent loss of the machinery or plant otherwise than in consequence of its demolition or destruction, equals any insurance moneys received by him in respect of the loss, and, so far as it consists of capital sums, any other compensation of any description so received,

(e) if that event is the permanent discontinuance of the trade before the occurrence of an event within paragraph (a), (b), (c) or (d) above, is the same as the disposal value specified for the last-mentioned event, F34 . . .

[F35 (ea) if that event is the grant of a right to use or otherwise deal with computer software for a consideration not consisting or not wholly consisting in money, equals the consideration in money which would have been given if the right had been granted in the open market;

(eb) unless paragraph (ea) above applies, if that event is the grant of a right to use or otherwise deal with computer software for no consideration or for a consideration in money lower than that which would have been given if the right had been granted in the open market, and otherwise than in circumstances such that—

(i) the grantee’s expenditure on the acquisition of the right can be taken into account in making allowances to him under this Part or under Part VII and the grantee is not a dual resident investing company which is connected with the grantor within the terms of section 839 of the principal Act, or

(ii) there is a charge to tax under Schedule E,

equals the consideration in money which would have been given if the right had been granted in the open market;

(ec) if that event is the grant of a right to use or otherwise deal with computer software and neither paragraph (ea) nor paragraph (eb) above applies, equals the net consideration in money received by the grantor in respect of the grant, together with any insurance moneys received by him in respect of the computer software by reason of any event affecting the consideration obtainable on the grant and, so far as it consists of capital sums, any other compensation of any description so received;]

F36 [(ee) if that event is the making of an additional VAT rebate in respect of capital expenditure incurred on the provision of the machinery or plant, equals the amount of that rebate; and]

(f) in the case of any other event, equals the price which the machinery or plant would have fetched if sold in the open market at the time of the event.

(2) The disposal value of any machinery or plant shall in no case exceed the capital expenditure incurred by the person in question on the provision of the machinery or plant for the purposes of the trade

F37 [reduced by the aggregate amount of any additional VAT rebates made to him in respect of any of that capital expenditure.

F38 (2A) If the event by reason of which a disposal value is to be brought into account is the making of an additional VAT rebate to a person, subsection (2) above shall have effect as if the capital expenditure referred to in that subsection were reduced (or further reduced) by the amount of any disposal value brought into account by that person in respect of the machinery or plant by reason of any earlier event (other than the making of an additional VAT rebate).]

[F39 (2AA) In deciding for the purposes of subsection (2) above whether the disposal value of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software exceeds the capital expenditure incurred by a person on its provision, the disposal value shall (for the purposes of that subsection only) be taken to be increased by the amount of any disposal value which, in respect of that person and that machinery or plant, falls or has fallen to be taken into account for the purposes of section 24 by virtue of any previous event falling within subsection (6A)(c) of that section.]

(3) Where the person mentioned in subsection (2) above has acquired the machinery or plant as a result of a transaction which was, or a series of transactions each of which was, between connected persons within the terms of section 839 of the principal Act, that subsection shall have effect as if it referred to the capital expenditure on the provision of the machinery or plant incurred by whichever party to that transaction, or to any of those transactions, incurred the greatest such expenditure.

F40 [(4) Where an additional VAT rebate has been made to any of the persons mentioned in subsection (3) above in respect of the capital expenditure incurred by him as there mentioned, that capital expenditure shall, in his case, be treated as reduced by the amount of the rebate, but no further reduction shall be made under subsection (2) above.]

Textual Amendments

F34 Word at end of s. 26(1)(e) repealed (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 123, Sch. 19 Pt. V Note 11.

F35 S. 26(1)(ea)-(ec) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(5)(9).

F36 S. 26(1)(ee) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(1).

F37 Words at end of s. 26(2) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(2).

F38 S. 26(2A) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(2).

F39 S. 26(2AA) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(6)(9).

F40 S. 26(4) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(3).

Modifications etc. (not altering text)

C17 S. 26(1) excluded (19.9.1994) by Coal Industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 20(3)(a); S.I. 1994/2189, art. 2, Sch.

27 Professions, employments, vocations etc. U.K.

(1) Except as otherwise provided and subject in particular to subsections (2) [F41 to (3)] below, the provisions of this Part shall, with any necessary adaptations, apply in relation to—

(a) professions, employments, vocations and offices, and

(b) the occupation of woodlands where the profits or gains thereof are assessable under Schedule D,

as they apply in relation to trades.

(2) The provisions of this Part in their application in accordance with this section to an office or employment—

(a) shall apply only to machinery or plant which is necessarily provided for use in the performance of the duties thereof, and

(b) shall have effect subject to section 198(2) of the principal Act (offices and employments with duties abroad).

[F42 (2A) In the case of machinery to which this subsection applies, subsection (2)(a) above shall have effect with the omission of the word “necessarily".

(2B) Subsection (2A) above applies to machinery if—

(a) it consists of a mechanically propelled road vehicle, and

(b) capital expenditure incurred on its provision is incurred partly for the purposes of the office or employment and partly for other purposes.

(2C) Section 24 in its application in accordance with this section to an office or employment shall have effect, where a person’s qualifying expenditure consists of expenditure incurred on the provision of machinery to which subsection (2A) above applies, with the modifications set out in subsections (2D) and (2E) below.

(2D) In subsection (2)(b) for the word “whole" there shall be substituted the words “appropriate fraction".

(2E) The following subsection shall be inserted after subsection (2)— “(2A) For the purposes of subsection (2)(b) above the appropriate fraction is—

where—

• A is the number of chargeable periods in the case of which—

• (a) the person has carried on the trade,

• (b) the machinery or plant has belonged to him, and

• (c) he has claimed an allowance falling to be made to him under this section by reference to expenditure incurred on the provision of the machinery or plant; and

• B is the number of chargeable periods in the case of which—

• (a) the person has carried on the trade,

• (b) the machinery or plant has belonged to him, and

• (c) an allowance falls to be made to him under this section by reference to expenditure incurred on the provision of the machinery or plant."”]

(3) This section shall have effect from 6th April 1993 with the omission of subsection (1)(b).

Textual Amendments

F41 Words substituted by Finance Act 1990 (c. 29), s. 87(1)(4)

F42 S. 27(2A)–(2E) inserted by Finance Act 1990 (c. 29), s. 87(2)(4)

[F43 28 Investment companies. U.K.

(1) This Part and the other provisions of the Corporation Tax Acts relating to allowances or charges under this Part apply with the necessary adaptations in relation to machinery and plant provided for use or used for the purposes of the management of the business of an investment company (as defined in section 130 of the principal Act) as they apply in relation to machinery and plant provided for use or used for the purposes of a trade.

(2) Effect shall be given to allowances and charges falling to be made by virtue of this section as follows—

(a) any allowance falling to be made for any accounting period shall, as far as may be, be given effect by deducting the amount of the allowance from any income for the period of the business, and in so far as effect cannot be so given section 75(4) of the principal Act shall apply; and

(b) effect shall be given to any charge falling to be made under this section by treating the amount on which the charge is to be made as income of the business;

and sections 73, 144 and 145 do not apply.

(3) Except as provided by subsection (2) above, the Corporation Tax Acts apply in relation to allowances or charges falling to be made by virtue of this section as if they were to be made in taxing a trade.

(4) For the purposes of this section the purposes of the management of a business shall be taken to be those purposes expenditure on which would be treated as expenses of management within section 75 of the principal Act.

(5) Corresponding allowances or charges in the case of the same machinery or plant shall not be made under this Part both under this section and in some other way.

(6) Expenditure to which this section applies shall not be taken into account otherwise than under this Part or as provided by section 75(4) of the principal Act.]

Textual Amendments

F43 S. 28 substituted (with effect in accordance with Sch. 8 paras. 55(2), 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 24

Modifications etc. (not altering text)

C18 S. 28 modified by S.I. 1992/1655, reg. 18A (as inserted (10.8.1995) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 1995 (S.I. 1995/1916), regs. 1, 8)

29 Furnished holiday lettings. U.K.

(1) For the purposes of this Part—

(a) the commercial letting of furnished holiday accommodation in the United Kingdom in respect of which the profits or gains are chargeable under Case VI of Schedule D shall be treated as a trade; and

(b) all such lettings made by a particular person or partnership or body of persons shall be treated as one trade.

(2) Subsection (1) above shall be construed as one with section 503 of the principal Act and, accordingly, section 504 of that Act shall also apply for the purposes of this section.

(3) Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this section as [F44 are] just and reasonable.

Textual Amendments

F44 Word in s. 29(3) substituted (with effect in accordance with reg. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 44

Modifications etc. (not altering text)

C19 S. 29(1) modified (with effect in accordance with s. 39(4)(5) of the amending Act) by Finance Act 1995 (c. 4), Sch. 6 para. 31