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Capital Allowances Act 2001

2001 CHAPTER 2

An Act to restate, with minor changes, certain enactments relating to capital allowances.

22nd March 2001

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Modifications etc. (not altering text)

C1Act construed as one with Capital Allowances Act 2001 (c. 2) (5.10.2004) by Energy Act 2004 (c. 20), s. 198(2), Sch. 9 para. 37(4) (with s. 38(2)); S.I. 2004/2575, art. 2(1), Sch. 1

C32005 c. 14, Sch. 10 construed as one with 2001 c. 2 (E.W.S.) (8.6.2005 for specified purposes, 24.7.2005 in so far as not already in force) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 34(3); S.I. 2005/1444, art. 2(1), Sch. 1; S.I. 2005/1909, art. 2, Sch.

C5Act modified by SI 2006/964 reg. 69V(6)(7) (as inserted (6.4.2008) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2008 (S.I. 2008/705), regs. 1, 5)

C6Act modified by SI 2006/964 reg. 69Z41(5)(6) (as inserted (6.4.2008) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2008 (S.I. 2008/705), regs. 1, 5)

C7Act modified (21.7.2008) by Finance Act 2008 (c. 9), s. 85(8)

C8Crossrail Act 2008 (c. 18), Sch. 13 construed as one with this Act (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 3(5)

C9Act modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 27(2)

C10Act modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 9(2)

C12Act extended in part (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 184 (with Sch. 2)

C13Act modified (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 948(1)-(4) (with Sch. 2)

C14Act modified (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 954(2)-(5) (with Sch. 2)

C15Act modified (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 955(2)-(6) (with Sch. 2)

C16Act applied (with modifications) by 2005 c. 5 s. 825A (as substituted (with effect in accordance with s. 3(4) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 3(3) (with s. 3(5)))

C20Act: power to amend conferred (12.2.2019) by Finance Act 2019 (c. 1), s. 30(1)

Modifications etc. (not altering text)

C21 S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7

Part 1U.K. Introduction

Chapter 1U.K. Capital allowances: general

1 Capital allowancesU.K.

(1)This Act provides for allowances in respect of capital expenditure (and for charges in connection with those allowances).

(2)The allowances for which this Act provides are those under—

(a)Part 2 (plant and machinery allowances);

[F1(aa)Part 2A (structures and buildings allowances);]

F2(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F3(ba)Part 3A (business premises renovation allowances)]

F4(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5(ca). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)Part 5 (mineral extraction allowances);

(e)Part 6 (research and development allowances);

(f)Part 7 (know-how allowances);

(g)Part 8 (patent allowances);

(h)Part 9 (dredging allowances);

(i)Part 10 (assured tenancy allowances).

(3)This Act also provides for allowances in respect of contributions to expenditure incurred on plant or machineryF6... for the purposes of a mineral extraction trade or on dredging (see Part 11).

F7(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2S. 1(2)(b) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 2(a)

F3S. 1(2)(ba) inserted (with effect in accordance with s. 92 of the amending Act) by Finance Act 2005 (c. 7), Sch. 6 para. 2; S.I. 2007/949, art. 2

F4S. 1(2)(c) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 2(a)

F5S. 1(2)(ca) omitted (with effect in accordance with Sch. 39 para. 40 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 38(2) (with Sch. 39 paras. 41, 42)

F6Words in s. 1(3) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 2(b)

F7S. 1(4)(5) omitted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 49

[F81ACapital allowances and charges: cash basisU.K.

(1)This section applies in relation to a chargeable period for which the profits of a trade, profession, vocation or property business (“the relevant activity”) carried on by a person are calculated on the cash basis.

(2)The person is not entitled to any allowance or liable to any charge under this Act except as provided by subsections (4) and (7).

(3)No disposal value is to be brought into account except as provided by subsections (5) and (8).

(4)If, apart from subsection (2), the person would be entitled to an allowance in respect of expenditure incurred on the provision of a car or liable to a charge in connection with such an allowance, the person is so entitled or (as the case may be) so liable.

(5)If, apart from subsection (3), a disposal value would be brought into account in respect of a car, the disposal value is brought into account in respect of the car.

(6)Subsections (7) and (8) apply if—

(a)a person carrying on a relevant activity incurs qualifying expenditure relating to an asset at a time when the profits of that activity are not calculated on the cash basis,

(b)after incurring the expenditure, the person enters the cash basis for a tax year, and

(c)no deduction would be allowed in respect of the expenditure in calculating the profits of the relevant activity on the cash basis for that tax year, on the assumption that the expenditure was paid in that tax year.

(7)If, apart from subsection (2), the person would be liable to a charge in connection with allowances in respect of the qualifying expenditure mentioned in subsection (6), the person is so liable.

(8)If, apart from subsection (3), a disposal value would be brought into account in respect of the asset mentioned in subsection (6), the disposal value is brought into account in respect of the asset.

(9)For the purposes of this section a person carrying on a trade, profession or vocation “enters the cash basis” for a tax year if—

(a)[F9the cash basis applies] in relation to the trade, profession or vocation for the tax year, and

(b)[F10the cash basis did not apply] in relation to the trade, profession or vocation for the previous tax year.

(10)For the purposes of this section a person carrying on a property business “enters the cash basis” for a tax year if the profits of the business are calculated—

(a)on the cash basis for the tax year (see section 271D of ITTOIA 2005), and

(b)in accordance with GAAP (see section 271B of that Act) for the previous tax year.

(11)In this section—

[F11(za)references to a trade, profession or vocation in relation to which the cash basis applies are to a trade, profession or vocation the profits of which are required by virtue of section 24A(1) of ITTOIA 2005 to be calculated on the cash basis,]

(a)references to calculating the profits of a trade, profession or vocation on the cash basis are to [F12doing so in accordance with section 24A of ITTOIA 2005], and

(b)references to calculating the profits of a property business 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).

(12)In this section—

  • car” has the same meaning as in Part 2 (see section 268A);

  • disposal value” means—

    (a)

    a disposal value for the purposes of Part 2, 4A, 5, 6, 7, 8 or 10, or

    (b)

    proceeds from a balancing event for the purposes of Part 3 or 3A;

  • qualifying expenditure” means qualifying expenditure within the meaning of any Part of this Act.]

Textual Amendments

F8S. 1A inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 50

F9Words in s. 1A(9)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 39(2)(a), 47 (with Sch. 10 paras. 48-50)

F10Words in s. 1A(9)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 39(2)(b), 47 (with Sch. 10 paras. 48-50)

F11S. 1A(11)(za) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 39(3)(a), 47 (with Sch. 10 paras. 48-50)

F12Words in s. 1A(11)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 39(3)(b), 47 (with Sch. 10 paras. 48-50)

2 General means of giving effect to capital allowancesU.K.

(1)Allowances and charges are to be given effect—

(a)for income tax purposes, in calculating income for a chargeable period, and

(b)for corporation tax purposes, in calculating profits for a chargeable period.

(2)For the meaning of “chargeable period”, see section 6.

(3)Subsection (1) needs to be read with the following provisions about giving effect to allowances and charges—

  • sections 247 to [F13262] (plant and machinery allowances);

  • [F14sections 270HA to 270HI (structures and buildings allowances);]

  • F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • [F16sections 360Z and 360Z1 (business premises renovation allowances)]

  • F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • section 432 (mineral extraction allowances);

  • section 450 (research and development allowances);

  • section 463 (know-how allowances);

  • sections 478 to 480 (patent allowances);

  • section 489 (dredging allowances);

  • section 529 (assured tenancy allowances).

(4)In subsection (1)(b) “profits” has the same meaning as in [F19Part 2 of CTA 2009 (see section 2(2) of that Act)].

Textual Amendments

F13Word in s. 2(3) substituted (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(2)(b)(i)

F15Words in s. 2(3) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 3(a)

F16Words in s. 2(3) inserted (with effect in accordance with s. 92 of the amending Act) by Finance Act 2005 (c. 7), Sch. 6 para. 3; S.I. 2007/949, art. 2

F17Words in s. 2(3) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 3(b)

F18S. 2(3) entry omitted (with effect in accordance with Sch. 39 para. 40 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 38(3) (with Sch. 39 paras. 41, 42)

F19Words in s. 2(4) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 475 (with Sch. 2 Pts. 1, 2)

3 Claims for capital allowancesU.K.

(1)No allowance is to be made under this ActF20... unless a claim for it is made.

(2)The claim must be included in a tax return.

[F21(2ZZA)Any claim for a first-year allowance under section 45O (expenditure on plant and machinery for use in [F22special tax sites]) must include, or be accompanied by, such information as Her Majesty's Revenue and Customs may require.]

[F23(2ZA)Any claim for an allowance under Part 2A (structures and buildings allowances) [F24

(a)] must be separately identified as such in the return[F25, and

(b)where it relates to [F26special tax site qualifying expenditure] (as defined in section 270BNA), must include, or be accompanied by, such information as Her Majesty's Revenue and Customs may require.]]

[F27(2A)Any claim for an allowance under Part 3A (business premises renovation allowances) must be separately identified as such in the return.]

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

(3)In this Act “tax return” means—

(a)for income tax purposes, a return required to be made under TMA 1970, and

(b)for corporation tax purposes, a company tax return required to be made under Schedule 18 to FA 1998 (company tax returns, assessments and related matters).

(4)Subsection (2) does not apply for income tax purposes to a claim for an allowance under—

(a)section 258 (claim for allowance in respect of special leasing of plant or machinery),

F29(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)section 479 (claim for patent allowance in respect of non-trading expenditure),

which is instead subject to section 42 of TMA 1970 (procedure for making claims and claims not included in returns).

(5)Subsection (2) does not apply for corporation tax purposes to a claim for an allowance under—

(a)section 260(3)(b) (claim to carry back allowance in respect of special leasing of plant or machinery), or

F30(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

which is instead subject to paragraphs 54 to 60 of Schedule 18 to FA 1998 (general provisions as to claims).

(6)This section is subject to section 42(6) and (7) of TMA 1970 (special provisions relating to partnerships).

Textual Amendments

F20Words in s. 3(1) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(ii)(a)

F21S. 3(2ZZA) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 15(2)

F24Words in s. 3(2ZA) renumbered as s. 3(2ZA)(a) (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 15(3)(a)

F25S. 3(2ZA)(b) and word inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 15(3)(b)

F27S. 3(2A) inserted (with effect in accordance with s. 92 of the amending Act) by Finance Act 2005 (c. 7), Sch. 6 para. 4; S.I. 2007/949, art. 2

F28S. 3(2B) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(ii)(b)

F29S. 3(4)(b) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 4

F30S. 3(5)(b) omitted (with effect in accordance with Sch. 27 para. 30(1) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 27 para. 4

Modifications etc. (not altering text)

C22S. 3(1) excluded (19.7.2006) by Finance Act 2006 (c. 25), s. 120(7)

C23S. 3(1) excluded by SI 2006/964 reg. 69Z1(8) (as inserted (6.4.2008) by The Authorised Investment Funds (Tax) (Amendment) Regulations 2008 (S.I. 2008/705), regs. 1, 5)

C24S. 3(1) excluded (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 599(8), 1184(1) (with Sch. 2)

4 Capital expenditureU.K.

(1)In this Act “capital expenditure” and “capital sums” are used in the sense given in this section.

(2)Capital expenditure” and “capital sums” do not include, in relation to a person incurring the expenditure or paying the sums—

(a)any expenditure or sum that may be deducted in calculating the profits or gains of a trade, profession or vocation or property business carried on by the person, F31...

[F32(aa)any cash basis expenditure, other than expenditure incurred on the provision of a car, or]

[F33(b)any expenditure or sum that may be allowed as a deduction under a relevant provision from the taxable earnings from an employment or office held by the person.]

[F34(2ZA)In subsection (2)(aa)—

  • cash basis expenditure” means any expenditure incurred—

    (a)

    in the case of a trade, profession or vocation, at a time when [F35the cash basis applies] in relation to the trade, profession or vocation [F36(see section 24A of ITTOIA 2005)], or

    (b)

    in the case of a property business, in a tax year for which the profits of the business are calculated on the cash basis (see section 271D of that Act); and

  • car” has the same meaning as in Part 2 (see section 268A) .]

[F37(2A)In subsection (2)—

relevant provision” means any of the following—

(a)section 262;

(b) section 232 of ITEPA 2003 (giving effect to mileage allowance relief);

(c)Chapters 2 to 6 of Part 5 of that Act (general deductions allowed from earnings); and

[F38(d) sections 188 to 194of FA 2004 (contributions under registered pension schemes), and]

taxable earnings” has the meaning given by section 10 of ITEPA 2003. ]

(3)Capital expenditure” and “capital sums” do not include, in relation to a recipient of the expenditure or sums—

(a)any amounts that are to be added in calculating the profits or gains of a trade, profession or vocation or property business carried on by the recipient, or

(b)any amounts that are [F39earnings] of an employment or office held by the recipient.

(4)Capital expenditure” and “capital sums” do not include, in relation to—

(a)a person incurring the expenditure or paying the sums, or

(b)a recipient of the expenditure or sums,

any expenditure or sum in the case of which a deduction of income tax falls or may fall to be made under [F40Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments or patent royalties) or under section 906 of that Act (certain royalties etc where usual place of abode of owner is abroad)].

F41(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F31Word in s. 4(2)(a) omitted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 51(2)(a)

F32S. 4(2)(aa) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 51(2)(b)

F33S. 4(2)(b) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 247(2) (with Sch. 7)

F34S. 4(2ZA) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 51(3)

F35Words in s. 4(2ZA)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 40(a), 47 (with Sch. 10 paras. 48-50)

F36Words in s. 4(2ZA)(a) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 40(b), 47 (with Sch. 10 paras. 48-50)

F37S. 4(2A) inserted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 247(3) (with Sch. 7)

F38Words in s. 4(2A) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 48 (with Sch. 36)

F39Word in s. 4(3) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 247(4) (with Sch. 7)

F40Words in s. 4(4) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 397(2) (with Sch. 2)

Modifications etc. (not altering text)

C25S. 4 applied (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), ss. 608, (with Sch. 2)

C26S. 4 applied by 1988 c. 1, s. 349ZA(5) (as inserted (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 149 (with Sch. 2))

C27S. 4 applied (6.4.2007) by Income Tax Act 2007 (c. 3), ss. 910(5), 1034(1) (with Sch. 2)

C28S. 4 applied (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 931, 1329(1) (with Sch. 2 Pts. 1, 2)

5 When capital expenditure is incurredU.K.

(1)For the purposes of this Act, the general rule is that an amount of capital expenditure is to be treated as incurred as soon as there is an unconditional obligation to pay it.

(2)The general rule applies even if the whole or a part of the expenditure is not required to be paid until a later date.

(3)There are the following exceptions to the general rule.

(4)If under an agreement—

(a)the capital expenditure is expenditure on the provision of an asset,

(b)an unconditional obligation to pay an amount of the expenditure comes into being as a result of the giving of a certificate or any other event,

(c)the giving of the certificate, or other event, occurs within the period of one month after the end of a chargeable period, and

(d)at or before the end of that chargeable period, the asset has become the property of, or is otherwise under the agreement attributed to, the person subject to the unconditional obligation to pay,

the expenditure is to be treated as incurred immediately before the end of that chargeable period.

(5)If under an agreement an amount of capital expenditure is not required to be paid until a date more than 4 months after the unconditional obligation to pay has come into being, the amount is to be treated as incurred on that date.

(6)If under an agreement—

(a)there is an unconditional obligation to pay an amount of capital expenditure on a date earlier than accords with normal commercial usage, and

(b)the sole or main benefit which might have been expected to be obtained thereby is that the amount would be treated, under the general rule, as incurred in an earlier chargeable period,

the amount is to be treated as incurred on the date on or before which it is required to be paid.

(7)This section—

(a)is subject to any provision of this Act which has the effect that expenditure is to be treated as incurred on a date later than would result from the application of this section, and

(b)does not apply to expenditure treated as incurred as a result of a person incurring an additional VAT liability.

Modifications etc. (not altering text)

C29S. 5 applied by Corporation Tax Act 2010 (c. 4), s. 356JA (as inserted (with effect in accordance with Sch. 15 paras. 6(1), 9(2) of the amending Act) by Finance Act 2014 (c. 26), Sch. 15 para. 3)

C31S. 5 applied by Corporation Tax Act 2010 (c. 4), s. 332K(1) (as inserted (with effect in accordance with Sch. 12 paras. 5, 7, 8 of the amending Act) by Finance Act 2015 (c. 11), Sch. 12 para. 2)

C32S. 5 excluded (10.6.2021) by Finance Act 2021 (c. 26), s. 9(7)(a)

C35 S. 5(1)-(5) applied (with modifications) by 1998 c. 48, s. 42(8B) (as inserted (2.12.2004 retrospective) by Finance Act 2005 (c. 7) , Sch. 3 para. 9(4) (5) (with Sch. 3 para. 9(6) (8) (9) ))

6 Meaning of “chargeable period”U.K.

(1)In this Act “chargeable period” means—

(a)for income tax purposes, a period of account, or

(b)for corporation tax purposes, an accounting period of a company.

(2)Period of account” means—

(a)in the case of a person entitled to an allowance or liable to a charge in calculating the profits of his trade, profession or vocation, a period for which accounts are drawn up for the purposes of the trade, profession or vocation, and

(b)in the case of any other person entitled to an allowance or liable to a charge, a tax year.

(3)Subsection (2)(a) is subject to subsections (4) to (6).

(4)If—

(a)two periods of account overlap, or

(b)one period of account includes another,

the period common to both is to be treated as part of the first period of account only.

(5)If there is a gap between two periods of account, the gap is to be treated as part of the first period of account.

(6)If a period of account would (apart from this subsection) be longer than 18 months, that period must be treated as divided into separate periods of account—

(a)the first beginning with the start date of the original period, and

(b)each subsequent one beginning with an anniversary of that date,

so as to ensure that none of the periods of account is longer than 12 months.

[F42CHAPTER 1AU.K.Trades attracting Northern Ireland rate of corporation tax

Textual Amendments

F42Pt. 1 Ch. 1A inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 2

6A“NIRE company” and “[F43SME (Northern Ireland employer) company]U.K.

In this Act—

  • NIRE company” means a company that is a Northern Ireland company for the purposes of Part 8B of CTA 2010 by virtue of [F44the SME (election) condition or] the large company condition in section 357KA of that Act;

  • [F45SME (Northern Ireland employer) company]means a company that is a Northern Ireland company for the purposes of Part 8B of CTA 2010 by virtue of the [F46SME (Northern Ireland employer) condition] in section 357KA of that Act.

Textual Amendments

F43Words in s. 6A heading substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 23(2)

F44Words in s. 6A inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 23(3)

F45Words in s. 6A substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 23(4)

F46Words in s. 6A substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 23(5)

6B“Northern Ireland firm” etcU.K.

(1)This section has effect for the purposes of this Act.

(2)Northern Ireland firm” has the meaning given by section 357WA of CTA 2010.

(3)If section 357WC of CTA 2010 (Northern Ireland profits etc of firm determined under Chapter 6 of Part 8B of that Act) applies to a Northern Ireland firm for a chargeable period, the partnership is a “Northern Ireland Chapter 6 firm” for any purpose for which that section applies.

(4)If section 357WD of CTA 2010 (Northern Ireland profits etc of firm determined under Chapter 7 of Part 8B of that Act) applies to a Northern Ireland firm for a chargeable period, the partnership is a “Northern Ireland Chapter 7 firm” for any purpose for which that section applies.

6C“NI rate activity”U.K.

(1)In this Act “NI rate activity” means—

(a)a qualifying trade carried on by [F47an SME (Northern Ireland employer) company], except to the extent that it is an excluded activity,

(b)a qualifying trade, other than an excluded financial trade, carried on by a NIRE company, to the extent that the trade—

(i)is carried on through a Northern Ireland regional establishment of the company, and

(ii)does not consist of an excluded activity,

(c)the back-office activities of an excluded financial trade carried on by [F48an SME (Northern Ireland employer) company] which has made an election for the purposes of section 357KB(2) of CTA 2010,

(d)the back-office activities of an excluded financial trade carried on by a NIRE company which has made an election for the purposes of section 357KB(2) of CTA 2010, to the extent that those activities are carried on through the Northern Ireland regional establishment of the company,

(e)a qualifying partnership trade carried on by a Northern Ireland Chapter 6 firm, except to the extent that it is an excluded activity,

(f)a qualifying partnership trade, other than an excluded financial trade, carried on by a Northern Ireland Chapter 7 firm, to the extent that the trade—

(i)is carried on through a Northern Ireland regional establishment of the partnership, and

(ii)does not consist of an excluded activity,

(g)the back-office activities of an excluded financial trade carried on by a Northern Ireland Chapter 6 firm which has made an election for the purposes of section 357WB(2) of CTA 2010, or

(h)the back-office activities of an excluded financial trade carried on by a Northern Ireland Chapter 7 firm which has made an election for the purposes of section 357WB(2) of CTA 2010, to the extent that those activities are carried on through the Northern Ireland regional establishment of the partnership.

(2)In subsection (1)—

  • back-office activities” has the same meaning as in Part 8B of CTA 2010 (see section 357XI of that Act);

  • excluded financial trade” means a trade that is an excluded trade for the purposes of Part 8B of CTA 2010 merely because it falls within one or more of the following provisions of that Act—

    (a)

    section 357XB (lending and investment),

    (b)

    section 357XC (investment management), or

    (c)

    section 357XE (re-insurance trade);

  • Northern Ireland regional establishment” has the same meaning as in Part 8B of CTA 2010 (see Chapter 5 of that Part as read, in relation to a partnership, with section 357WA(4) of that Act);

  • qualifying partnership trade” has the same meaning as in Part 8B of CTA 2010 (see section 357WB of that Act);

  • qualifying trade” has the same meaning as in Part 8B of CTA 2010 (see section 357KB of that Act).

Textual Amendments

F47Words in s. 6C(1)(a) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(a)

F48Words in s. 6C(1)(c) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(a)

6D NI rate activity treated as separate tradeU.K.

(1)For the purposes of this Act, the NI rate activity carried on by [F49an SME (Northern Ireland employer) company] or a NIRE company is to be treated as a separate trade, distinct from any other activities carried on by the company as part of the trade.

(2)For the purposes of the corporate partner calculation, the NI rate activity carried on by a Northern Ireland firm is to be treated as a separate trade, distinct from any other activities carried on by the firm as part of the trade.

(3)In this Act “the corporate partner calculation”, in relation to a trade carried on by a Northern Ireland firm, means the determination of the allowances and charges to which effect is to be given under this Act in determining under subsection (3) or (4) of section 1259 of CTA 2009 (calculation of firm's profits and losses) the amount of the profits of the trade chargeable to corporation tax.

Textual Amendments

F49Words in s. 6D(1) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(b)

6EGiving effect to allowances and charges: NI rate activity casesU.K.

(1)This section applies if [F50an SME (Northern Ireland employer) company] or a NIRE company is entitled or liable to—

(a)an allowance or charge under Part 2 (plant and machinery allowances) where the qualifying activity is a trade,

[F51(aa)an allowance under Part 2A (structures and buildings allowances),]

(b)an allowance or charge under Part 3A (business premises renovation allowances),

(c)an allowance or charge under Part 5 (mineral extraction allowances),

(d)an allowance or charge under Part 6 (research and development), or

(e)an allowance under Part 9 (dredging allowances).

(2)For the purposes of the corporate partner calculation, this section also applies if a Northern Ireland firm is entitled or liable to an allowance or charge falling within any of subsection (1)(a) to (e).

(3)The allowance or charge is to be given effect in calculating the profits of the trade, by treating—

(a)the allowance as an expense of the trade, and

(b)the charge as a receipt of the trade.

(4)If the allowance or charge relates to an NI rate activity, it is treated for the purposes of Part 8B of CTA 2010 (trading profits taxable at the Northern Ireland rate) as forming part of the Northern Ireland profits or Northern Ireland losses of the trade.

(5)If the allowance or charge relates to a main rate activity, it is treated for the purposes of Part 8B of CTA 2010 as forming part of the mainstream profits or mainstream losses of the trade.

(6)In this section—

(a)the trade” means the trade carried on by the company or partnership (disregarding for this purpose section 6D), and

(b)main rate activity” means so much of the trade as is not an NI rate activity.]

Chapter 2U.K. Exclusion of double relief

7 No double allowancesU.K.

(1)If an allowance is made under any Part of this Act to a person in respect of capital expenditure, no allowance is to be made to him under any other Part in respect of—

(a)that expenditure, or

(b)the provision of any asset to which that expenditure related.

[F52(1A)In subsection (1), the reference to capital expenditure includes a reference to expenditure that is treated as capital expenditure for the purposes of section 270BJ(1) (structures and buildings allowances: expenditure on renovation, conversion and incidental repairs).]

(2)This section does not apply in relation to Parts 7 and 8 (know-how and patent allowances).

8 No double relief through pooling under Part 2 (plant and machinery allowances)U.K.

(1)Subsection (2) applies if, under Part 2—

(a)any capital expenditure has been allocated to a pool, and

(b)an allowance or charge has been made to or on any person in respect of the pool.

(2)The person to or on whom the allowance or charge has been made is not entitled to an allowance under any Part other than Part 2 in respect of—

(a)the expenditure allocated to the pool, or

(b)the provision of any asset to which the allocated expenditure related.

(3)Subsection (4) applies if under any Part other than Part 2 an allowance has been made to a person in respect of any capital expenditure.

(4)The person to whom the allowance has been made is not entitled to allocate to any pool—

(a)that expenditure, or

(b)any expenditure on the provision of any asset to which the expenditure mentioned in paragraph (a) related.

(5)This section does not apply in relation to Parts 7 and 8 (know-how and patent allowances).

9 Interaction between fixtures claims and other claimsU.K.

(1)A person is not entitled to make a fixtures claim in respect of any capital expenditure relating to an asset if—

(a)any person entitled to do so has at any previous time claimed an allowance under any Part other than Part 2, and

(b)the claim was for an allowance in respect of capital expenditure relating, in whole or part, to the asset.

(2)Subsection (1) does not prevent a person making a fixtures claim in respect of capital expenditure if—

(a)the only previous claim was under Part 3[F53, 3A] or 6 (industrial buildings and research and development allowances), and

(b)section 186(2)[F54, 186A(2)] or 187(2) (limit on amount of expenditure that may be taken into account) applies to that expenditure.

(3)If a person entitled to do so has made a fixtures claim in respect of capital expenditure relating to an asset, no one is entitled to an allowance on a later claim under any Part other than Part 2 in respect of any capital expenditure relating to the asset.

(4)A person makes a fixtures claim in respect of expenditure if he makes a claim (in the sense given in section 202(3)) under Chapter 14 of Part 2 in respect of the expenditure as expenditure on the provision of a fixture.

Textual Amendments

F53Words in s. 9(2)(a) inserted (with effect in accordance with Sch. 10 para. 12 of the amending Act) by Finance Act 2012 (c. 14), Sch. 10 para. 7(a)

F54Words in s. 9(2)(b) inserted (with effect in accordance with Sch. 10 para. 12 of the amending Act) by Finance Act 2012 (c. 14), Sch. 10 para. 7(b)

10 InterpretationU.K.

(1)In this Chapter “capital expenditure” includes any contribution to capital expenditure.

(2)For the purposes of this Chapter—

(a)expenditure relates to an asset only if it relates to its provision, and

(b)the provision of an asset includes its construction or acquisition.

Part 2U.K. Plant and machinery allowances

Modifications etc. (not altering text)

C36Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)

C37 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1

C38 Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1

C39 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1

C40Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19

C41Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35

C42Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37

C43Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24

C44Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))

C45Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)

Chapter 1U.K. Introduction

11 General conditions as to availability of plant and machinery allowancesU.K.

(1)Allowances are available under this Part if a person carries on a qualifying activity and incurs qualifying expenditure.

(2)Qualifying activity” has the meaning given by Chapter 2.

(3)Allowances under this Part must be calculated separately for each qualifying activity which a person carries on.

(4)The general rule is that expenditure is qualifying expenditure if—

(a)it is capital expenditure on the provision of plant or machinery wholly or partly for the purposes of the qualifying activity carried on by the person incurring the expenditure, and

(b)the person incurring the expenditure owns the plant or machinery as a result of incurring it.

(5)But the general rule is affected by other provisions of this Act, and in particular by Chapter 3.

12 Expenditure incurred before qualifying activity carried onU.K.

[F55(1)] For the purposes of this Part, expenditure incurred for the purposes of a qualifying activity by a person about to carry on the activity is to be treated as if it had been incurred by him on the first day on which he carries on the activity.

[F56(2)Subsection (3) applies if—

(a)a company that does not have a Northern Ireland regional establishment incurs expenditure for the purposes of a trade,

(b)the activities for the purposes of which the expenditure is incurred would, if the company were a NIRE company, be an NI rate activity treated as a separate trade, and

(c)the company subsequently becomes a NIRE company.

(3)The expenditure is to be treated as incurred on the first day of the first chargeable period in which the company is a NIRE company.

(4)Subsection (5) applies if—

(a)a partnership that does not have a Northern Ireland regional establishment incurs expenditure for the purposes of a trade,

(b)the activities for the purposes of which the expenditure is incurred would, if the partnership were a Northern Ireland Chapter 7 firm, be an NI rate activity treated as a separate trade, and

(c)the partnership subsequently becomes a Northern Ireland Chapter 7 firm.

(5)The expenditure is to be treated for the purposes of this Part so far as relating to the corporate partner calculation as incurred on the first day of the first chargeable period in which the partnership is a Northern Ireland Chapter 7 firm.

(6)In this section “Northern Ireland regional establishment” has the same meaning as in Part 8B of CTA 2010 (see Chapter 5 of that Part as read, in relation to a partnership, with section 357WA(4) of that Act).]

Textual Amendments

F55S. 12 renumbered as s. 12(1) (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 3(2)

F56S. 12(2)-(6) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 3(3)

13 Use for qualifying activity of plant or machinery provided for other purposesU.K.

(1)This section applies if a person—

(a)brings plant or machinery into use for the purposes of a qualifying activity carried on by him, and

(b)on the date when he does so, owns the plant or machinery as a result of having incurred capital expenditure (“actual expenditure”) on its provision for purposes other than those of that qualifying activity.

(2)The person is to be treated—

(a)as having incurred capital expenditure (“notional expenditure”) on the provision of the plant or machinery for the purposes of the qualifying activity on the date on which it is brought into use for those purposes, and

(b)as owning the plant or machinery as a result as having incurred that expenditure.

(3)Subject to subsection (4), the amount of the notional expenditure is the market value of the plant or machinery on the date when it is brought into use for the purposes of the qualifying activity.

(4)If the market value is greater than the actual expenditure, the amount of the notional expenditure is the amount of the actual expenditure, less any amount required to be deducted under subsection (5).

(5)The amount to be deducted is any amount that under section 218F57... would have been left out of account in determining the person’s available qualifying expenditure if the actual expenditure had been incurred on the provision of the plant or machinery for the purposes of the qualifying activity.

(6)The question whether the provision of the plant or machinery is to be treated as wholly or only partly for the purposes of the qualifying activity is to be determined according to whether the use referred to in subsection (1)(a) is wholly or only partly for those purposes.

(7)This section is subject to section 161 (pre-trading expenditure on mineral exploration and access).

Textual Amendments

F57Words in s. 13(5) omitted (with effect in accordance with Sch. 20 para. 6(19) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 20 para. 6(2)

Modifications etc. (not altering text)

C46S. 13 applied (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), ss. 827, (with s. 828(2), Sch. 2)

C47S. 13 applied (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 126(2), 1184(1) (with Sch. 2)

C48S. 13 modified by 2005 c. 5, s. 825C (as substituted (with effect in accordance with s. 3(4) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 3(3) (with s. 3(5)))

C49S. 13 modified by 2009 c. 4, s. 18C(2) (as inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 4, 31)

[F5813AUse for other purposes of plant or machinery previously used for long funding leasingU.K.

(1)This section applies if a person who has been using plant or machinery for the purpose of leasing it under a long funding lease (see Chapter 6A)—

(a)ceases to use the plant or machinery for that purpose without ceasing to use it for the purposes of a qualifying activity carried on by him, and

(b)on the date of the cessation, owns the plant or machinery as a result of having incurred capital expenditure on its provision for the purposes of the qualifying activity.

(2)The person is to be treated—

(a)as having incurred capital expenditure (“notional expenditure”) on the provision of the plant or machinery for the purposes of the qualifying activity on the day after the cessation,

(b)as owning the plant or machinery as a result of having incurred that expenditure, and

(c)as if the plant or machinery on and after that day were different plant or machinery from the plant or machinery before that day.

(3)The amount of the notional expenditure is an amount equal to the termination amount, determined in accordance with section 70YG, in the case of the long funding lease under which the plant or machinery was last leased before the cessation.]

Textual Amendments

F58S. 13A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 2

[F5913BUse for other purposes of plant or machinery: property businessesU.K.

(1)This section applies if a person who has been using plant or machinery for the purposes of a relevant qualifying activity—

(a)ceases to use the plant or machinery for that purpose without ceasing to use it for the purposes of another relevant qualifying activity (“the other activity”) carried on by the person, and

(b)on the date of the cessation, owns the plant or machinery as a result of having incurred capital expenditure on its provision for the purposes of the other activity.

(2)The person is to be treated—

(a)as having incurred capital expenditure (“notional expenditure”) on the provision of the plant or machinery for the purposes of the other activity on the day after the cessation,

(b)as owning the plant or machinery as a result of having incurred that expenditure, and

(c)as if the plant or machinery on or after that day were different plant or machinery from the plant or machinery before that day.

(3)Subject to subsection (4), the amount of the notional expenditure is the market value of the plant or machinery on the date of cessation.

(4)If the market value is greater than the actual expenditure, the amount of the notional expenditure is the amount of the actual expenditure.

(5)Relevant qualifying activity” means—

(a)ordinary UK property business or UK furnished holiday lettings business, or

(b)ordinary overseas property business or EEA furnished holiday lettings business,

(as the case may be).]

Textual Amendments

F59S. 13B inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(2)

14 Use for qualifying activity of plant or machinery which is a giftU.K.

(1)This section applies if a person—

(a)is the owner of plant or machinery as a result of a gift, and

(b)brings the plant or machinery into use for the purposes of a qualifying activity carried on by him.

(2)The person is to be treated—

(a)as having incurred capital expenditure on the provision of the plant or machinery for the purposes of the qualifying activity on the date on which it is brought into use for those purposes, and

(b)as owning the plant or machinery as a result of having incurred that expenditure.

(3)The amount of that capital expenditure is to be treated as being the market value of the plant or machinery on the date when it was brought into use for the purposes of the qualifying activity.

(4)The question whether the provision of the plant or machinery is to be treated as wholly or only partly for the purposes of the qualifying activity is to be determined according to whether the use referred to in subsection (1)(b) is wholly or only partly for those purposes.

(5)This section is subject to section 161 (pre-trading expenditure on mineral exploration and access).

Chapter 2U.K. Qualifying activities

15 Qualifying activitiesU.K.

(1)Each of the following is a qualifying activity for the purposes of this Part—

(a)a trade,

(b)an ordinary [F60UK] [F61property] business,

(c)a [F62UK furnished] holiday lettings business,

(d)an [F63ordinary overseas] property business,

[F64(da)an EEA furnished holiday lettings business,]

(e)a profession or vocation,

(f)a concern listed in [F65section 12(4) of ITTOIA 2005 or] [F66section 39(4) of CTA 2009] (mines, transport undertakings etc.),

[F67(g)managing the investments of a company with investment business,]

(h)special leasing of plant or machinery, and

(i)an employment or office,

but to the extent only that the profits or gains from the activity are, or (if there were any) would be, chargeable to tax.

(2)Subsection (1) is subject to the following provisions of this Part.

[F68(2ZA)Where an activity of a company is treated by subsection (1) of section 6D (NI rate activity treated as separate trade) as a separate trade, that activity is an activity separate from any other activity of the company.

(2ZB)Where an activity of a Northern Ireland firm is treated by subsection (2) of section 6D as a separate trade for the purposes of the corporate partner calculation, that activity is for the purposes of this Part, so far as relating to the corporate partner calculation, an activity separate from every other activity of the Northern Ireland firm.]

[F69(2A)A business carried on through one or more permanent establishments outside the United Kingdom by a company in relation to which an election under section 18A of CTA 2009 has effect—

(a)is an activity separate from any other activity of the company, and

(b)is to be regarded as an activity all the profits and gains from which are not, or (if there were any) would not be, chargeable to tax.]

[F70(2B)Subsection (2A) does not apply to the business so far as it consists of a plant or machinery lease under which the company is a lessor if any profits or losses arising from the lease are to be left out of account as mentioned in section 18C(3) of CTA 2009.]

(3)This section, in so far as it provides for—

(a)an ordinary [F71UK] [F72property] business,

(b)an [F73ordinary overseas] property business, or

(c)special leasing of plant or machinery,

to be a qualifying activity, needs to be read with section 35 (expenditure on plant or machinery for use in a dwelling-house not qualifying expenditure in certain cases).

(4)Also, subsection (1)(i) needs to be read with sections 36 (restriction on qualifying expenditure in case of employment or office) and 80 (vehicles provided for purposes of employment or office).

Textual Amendments

F60Word in s. 15(1)(b) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(a)

F61 Word in s. 15(1)(b) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 526(2)(a) (with Sch. 2 )

F62Words in s. 15(1)(c) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(b)

F63Words in s. 15(1)(d) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(c)

F64S. 15(1)(da) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(d)

F66Words in s. 15(1)(f) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 476 (with Sch. 2 Pts. 1, 2)

F68S. 15(2ZA)(2ZB) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 4

F69S. 15(2A) inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 15, 31

F70S. 15(2B) inserted (1.1.2013) by Finance Act 2012 (c. 14), Sch. 20 paras. 9, 55(1)

F71Word in s. 15(3)(a) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(e)

F72 Word in s. 15(3)(a) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 526(3) (with Sch. 2 )

F73Words in s. 15(3)(b) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(3)(f)

16 Ordinary [F74UK] [F75property] businessesU.K.

In this Part “[F76ordinary [F77UK] property] business[F78means a UK property business F79... ] except in so far as it is a [F80UK furnished] holiday lettings business.

Textual Amendments

F74Word in s. 16 heading inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(4)(a)

F77Word in s. 16 inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(4)(b)

F79Words in s. 16 repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 477, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F80Words in s. 16 substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(4)(c)

17 [F81UK furnished] holiday lettings businessesU.K.

(1)In this Part “[F82UK furnished] holiday lettings business” means [F83a UK property businessF84... which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation] as it consists of the commercial letting of furnished holiday accommodation in the United Kingdom.

(2)All [F85such] commercial lettings of furnished holiday accommodation made by a particular person or partnership or body of persons are to be treated as one qualifying activity.

[F86(3) For the purposes of income tax the “ commercial letting of furnished holiday accommodation ” has the same meaning as it has for the purposes of Chapter 6 of Part 3 of ITTOIA 2005.

For the purposes of corporation tax the “ commercial letting of furnished holiday accommodation[F87has the same meaning as it has for the purposes of Chapter 6 of Part 4 of CTA 2009 (see section 265)].]

(4)If there is a letting of accommodation only part of which is holiday accommodation, such apportionments are to be made for the purposes of this section as are just and reasonable.

Textual Amendments

F81Words in s. 17 heading substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(5)(a)

F82Words in s. 17(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(5)(b)

F83Words in s. 17(1) substituted (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 528(2) (with Sch. 2)

F84Words in s. 17(1) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 478(2), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F85Word in s. 17(2) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(5)(c)

F86S. 17(3) substituted (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 528(3) (with Sch. 2)

F87Words in s. 17(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 478(3) (with Sch. 2 Pts. 1, 2)

[F8817AOrdinary overseas property businessU.K.

In this Part “ordinary overseas property business” means an overseas property business except in so far as it is an EEA furnished holiday lettings business.

Textual Amendments

F88Ss. 17A, 17B inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(6)

17B EEA furnished holiday lettings businessesU.K.

(1)In this Part “EEA furnished holiday lettings business” means an overseas property business which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation in one or more EEA states.

(2)All such commercial lettings of furnished holiday accommodation made by a particular person or partnership or body of persons are to be treated as one qualifying activity.

(3)Subsections (3) and (4) of section 17 are to apply for the purposes of this section as they apply for the purposes of that section.]

Textual Amendments

F88Ss. 17A, 17B inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(6)

18.Managing the investments of a company with investment businessU.K.

(1) For the purposes of this Part, managing the investments of a company with investment business consists of pursuing those purposes expenditure on which would be treated as expenses of management within [F89section 1219 of CTA 2009].

(2) In this Part “company with investment business” has the meaning given by [F90section 1218B] of CTA 2009.

Textual Amendments

F89Words in s. 18(1) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 479(2) (with Sch. 2 Pts. 1, 2)

F90Words in s. 18 substituted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 21(4), 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

19 Special leasing of plant or machineryU.K.

(1)In this Part “special leasing”, in relation to plant or machinery, means hiring out the plant or machinery otherwise than in the course of any other qualifying activity (and references to a lessor or lessee in the context of special leasing are to be read accordingly).

(2)A qualifying activity consisting of special leasing of plant or machinery begins when the plant or machinery is first hired out in the circumstances given in subsection (1).

(3)A qualifying activity consisting of special leasing of plant or machinery is permanently discontinued if the lessor permanently ceases to hire out the plant or machinery otherwise than in the course of any other qualifying activity.

(4)A person who has more than one item of plant or machinery that is the subject of special leasing has a separate qualifying activity in relation to each item.

(5)If a company carrying on any [F91long-term business]

(a)hires out plant or machinery which is an investment asset (as defined by section 545(2)), and

(b)does not do so in the course of a property business,

the company is to be treated for the purposes of subsection (1) as hiring out the plant or machinery otherwise than in the course of a qualifying activity.

Textual Amendments

F91Words in s. 19(5) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 95

20 Employments and officesU.K.

(1)In section 15(1)(i) “employment” does not include an employment the performance of the duties of which is treated as the carrying on of a trade under [F92section 15 of ITTOIA 2005] (divers and diving supervisors in the North Sea etc.).

(2)Subsection (3) applies if the [F93earnings] for any duties of an employment or office [F94fall within section 22 or 26 of ITEPA 2003].

(3)This Part applies in relation to—

(a)[F95those earnings] , or

(b)any [F96other taxable earnings (as defined by section 10 of ITEPA 2003)] of the employment or office,

as if the performance of the duties did not belong to that employment or office.

Textual Amendments

F92 Words in s. 20(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 529 (with Sch. 2 )

F93 Word in s. 20(2) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1) , s. 723 , Sch. 6 para. 248(2)(a) (with Sch. 7 )

F94 Words in s. 20(2) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1) , s. 723 , Sch. 6 para. 248(2)(b) (with Sch. 7 )

F95 Words in s. 20(3) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1) , s. 723 , Sch. 6 para. 248(3)(a) (with Sch. 7 )

F96 Words in s. 20(3) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1) , s. 723 , Sch. 6 para. 248(3)(b) (with Sch. 7 )

Chapter 3U.K. Qualifying expenditure

Buildings, structures and landU.K.

21 BuildingsU.K.

(1)For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on the provision of a building.

(2)The provision of a building includes its construction or acquisition.

(3)In this section, “building” includes an asset which—

(a)is incorporated in the building,

(b)although not incorporated in the building (whether because the asset is moveable or for any other reason), is in the building and is of a kind normally incorporated in a building, or

(c)is in, or connected with, the building and is in list A.

List A

Assets treated as buildings

1.Walls, floors, ceilings, doors, gates, shutters, windows and stairs.
2.Mains services, and systems, for water, electricity and gas.
3.Waste disposal systems.
4.Sewerage and drainage systems.
5.Shafts or other structures in which lifts, hoists, escalators and moving walkways are installed.
6.Fire safety systems.

(4)This section is subject to section 23 [F97(but any reference in list C in subsection (4) of that section to “plant” does not include anything where expenditure on its provision is excluded by this section)].

Textual Amendments

F97Words in s. 21(4) inserted (with effect in accordance with s. 35(3) of the amending Act) by Finance Act 2019 (c. 1), s. 35(2)

22 Structures, assets and worksU.K.

(1)For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on—

(a)the provision of a structure or other asset in list B, or

(b)any works involving the alteration of land.

List B

Excluded structures and other assets

1.A tunnel, bridge, viaduct, aqueduct, embankment or cutting.
2.A way, hard standing (such as a pavement), road, railway, tramway, a park for vehicles or containers, or an airstrip or runway.
3.An inland navigation, including a canal or basin or a navigable river.
4.A dam, reservoir or barrage, including any sluices, gates, generators and other equipment associated with the dam, reservoir or barrage.
5.A dock, harbour, wharf, pier, marina or jetty or any other structure in or at which vessels may be kept, or merchandise or passengers may be shipped or unshipped.
6.A dike, sea wall, weir or drainage ditch.
7.

Any structure not within items 1 to 6 other than—

(a)

a structure (but not a building) within Chapter 2 of Part 3 (meaning of “industrial building”),

(b)

a structure in use for the purposes of an undertaking for the extraction, production, processing or distribution of gas, and

(c)

a structure in use for the purposes of a trade which consists in the provision of telecommunication, television or radio services.

(2)The provision of a structure or other asset includes its construction or acquisition.

(3)In this section—

(a)structure” means a fixed structure of any kind, other than a building (as defined by section 21(3)), and

(b)land” does not include buildings or other structures, but otherwise has the meaning given in Schedule 1 to the Interpretation Act 1978 (c. 30).

(4)This section is subject to section 23 [F98(but any reference in list C in subsection (4) of that section to “plant” does not include anything where expenditure on its provision is excluded by this section)].

Textual Amendments

F98Words in s. 22(4) inserted (with effect in accordance with s. 35(3) of the amending Act) by Finance Act 2019 (c. 1), s. 35(2)

23 Expenditure unaffected by sections 21 and 22U.K.

(1)Sections 21 and 22 do not apply to any expenditure to which any of the provisions listed in subsection (2) applies.

(2)The provisions are—

  • section 28 (thermal insulation of F99...buildings);

  • F100...

  • F101...

  • F102...

  • F103...

  • section 33 (personal security);

  • [F104section 33A (integral features);]

  • section 71 (software and rights to software);

  • section [F105143 of ITTOIA 2005 or section] 40D of F(No.2)A 1992 (election relating to tax treatment of films expenditure).

(3)Sections 21 and 22 also do not affect the question whether expenditure on any item described in list C is, for the purposes of this Act, expenditure on the provision of plant or machinery.

(4)But items 1 to 16 of list C do not include any asset whose principal purpose is to insulate or enclose the interior of a building or to provide an interior wall, floor or ceiling which (in each case) is intended to remain permanently in place.

List C

Expenditure unaffected by sections 21 and 22

1.Machinery (including devices for providing motive power) not within any other item in this list.
2.

F106...Gas and sewerage systems provided mainly—

(a)

to meet the particular requirements of the qualifying activity, or

(b)

to serve particular plant or machinery used for the purposes of the qualifying activity.

3.F107. . .
4.Manufacturing or processing equipment; storage equipment (including cold rooms); display equipment; and counters, checkouts and similar equipment.
5.Cookers, washing machines, dishwashers, refrigerators and similar equipment; washbasins, sinks, baths, showers, sanitary ware and similar equipment; and furniture and furnishings.
6. [F108Hoists.]
7.Sound insulation provided mainly to meet the particular requirements of the qualifying activity.
8.Computer, telecommunication and surveillance systems (including their wiring or other links).
9.Refrigeration or cooling equipment.
10.Fire alarm systems; sprinkler and other equipment for extinguishing or containing fires.
11.Burglar alarm systems.
12.Strong rooms in bank or building society premises; safes.
13.Partition walls, where moveable and intended to be moved in the course of the qualifying activity.
14.Decorative assets provided for the enjoyment of the public in hotel, restaurant or similar trades.
15.Advertising hoardings; signs, displays and similar assets.
16.Swimming pools (including diving boards, slides and structures on which such boards or slides are mounted).
17.Any glasshouse constructed so that the required environment (namely, air, heat, light, irrigation and temperature) for the growing of plants is provided automatically by means of devices forming an integral part of its structure.
18.Cold stores.
19.Caravans provided mainly for holiday lettings.
20.Buildings provided for testing aircraft engines run within the buildings.
21.Moveable buildings intended to be moved in the course of the qualifying activity.
22.The alteration of land for the purpose only of installing plant or machinery.
23.The provision of dry docks.
24.The provision of any jetty or similar structure provided mainly to carry plant or machinery.
25.The provision of pipelines or underground ducts or tunnels with a primary purpose of carrying utility conduits.
26.The provision of towers to support floodlights.
27.

The provision of—

(a)

any reservoir incorporated into a water treatment works, or

(b)

any service reservoir of treated water for supply within any housing estate or other particular locality.

28.

The provision of—

(a)

silos provided for temporary storage, or

(b)

storage tanks.

29.The provision of slurry pits or silage clamps.
30.The provision of fish tanks or fish ponds.
31.The provision of rails, sleepers and ballast for a railway or tramway.
32.The provision of structures and other assets for providing the setting for any ride at an amusement park or exhibition.
33.The provision of fixed zoo cages.

(5)In item 19 of list C, “caravan” includes, in relation to a holiday caravan site, anything that is treated as a caravan for the purposes of—

(a)the Caravan Sites and Control of Development Act 1960 (c. 62), or

(b)the Caravans Act (Northern Ireland) 1963 (c. 17 (N.I.)).

Textual Amendments

F99Word in s. 23(2) omitted (with effect in accordance with s. 71(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 71(7)

F100Words in s. 23(2) omitted (with effect in accordance with s. 72(4) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 72(2)

F101S. 23(2) entry omitted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 34(2)(a)

F102S. 23(2) entry omitted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 34(2)(b)

F103S. 23(2) entry omitted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 39 para. 34(2)(c)

F104Words in s. 23(2) inserted (with effect in accordance with s. 73(6) of the amending Act) by Finance Act 2008 (c. 9), s. 73(1)(a)

F106Words in s. 23(4) omitted (with effect in accordance with s. 73(6) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 73(1)(b)(i)

F107Words in s. 23(4) omitted (with effect in accordance with s. 73(6) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 73(1)(b)(ii)

F108Word in s. 23(4) substituted (with effect in accordance with s. 73(6) of the amending Act) by Finance Act 2008 (c. 9), s. 73(1)(b)(iii)

24 Interests in landU.K.

(1)For the purposes of this Act, expenditure on the provision of plant or machinery does not include expenditure on the acquisition of an interest in land.

(2)In this section “land” does not include—

(a)buildings or other structures, or

(b)any asset which is so installed or otherwise fixed to any description of land as to become, in law, part of the land,

but otherwise has the meaning given in Schedule 1 to the Interpretation Act 1978 (c. 30).

(3)Subject to subsection (2), “interest in land” has the meaning given by section 175 (definitions in connection with provisions about fixtures).

25 Building alterations connected with installation of plant or machineryU.K.

If a person carrying on a qualifying activity incurs capital expenditure on alterations to an existing building incidental to the installation of plant or machinery for the purposes of the qualifying activity, this Part applies as if—

(a)the expenditure were expenditure on the provision of the plant or machinery, and

(b)the works representing the expenditure formed part of the plant or machinery.

Demolition costsU.K.

26 Demolition costsU.K.

(1)This section applies if—

(a)plant or machinery is demolished, and

(b)the last use of the plant or machinery was for the purposes of a qualifying activity.

(2)If the person carrying on the qualifying activity replaces the plant or machinery with other plant or machinery then, for the purposes of this Part, the net cost of the demolition to that person is treated as expenditure incurred on the provision of the other plant or machinery.

(3)If the person carrying on the qualifying activity does not replace the plant or machinery, the net cost of the demolition to that person is allocated to the appropriate pool for the chargeable period in which the demolition takes place.

(4)In subsection (3)—

  • the appropriate pool” means the pool to which the expenditure on the demolished plant or machinery has been or would be allocated in accordance with this Part, and

  • the net cost of the demolition” means the amount, if any, by which the cost of the demolition exceeds any money received for the remains of the plant or machinery.

(5)Subsection (3) is subject to section 164(4) ([F109general decommissioning expenditure] before cessation of ring fence trade: election for special allowance) [F110and sections 165A to 165E (restrictions on allowances: anti-avoidance).]

Textual Amendments

F109Words in s. 26(5) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 3

F110Words in s. 26(5) inserted (with effect in accordance with Sch. 32 para. 8 of the amending Act) by Finance Act 2013 (c. 29), Sch. 32 para. 3

Expenditure on thermal insulation [F111and personal security] U.K.

Textual Amendments

F111Words in s. 27 cross-heading substituted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 34(3)(b)

27 Application of Part to thermal insulation [F112and personal security] U.K.

(1)Subsection (2) has effect in relation to expenditure if—

(a)it is expenditure to which [F113section 28 or 33] applies, and

(b)an allowance under Part 2 or a deduction in respect of the expenditure could not, in the absence of this section, be made in calculating the income from the qualifying activity in question.

(2)This Part (including in particular section 11(4)) applies as if—

(a)the expenditure were capital expenditure on the provision of plant or machinery for the purposes of the qualifying activity in question, and

(b)the person who incurred the expenditure owned plant or machinery as a result of incurring it.

Textual Amendments

F112Words in s. 27 heading substituted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 34(3)(b)

F113Words in s. 27(1)(a) substituted (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 34(3)(a)

28 Thermal insulation of F114... buildingsU.K.

(1)This section applies to expenditure if a person carrying on a qualifying activity [F115other than an ordinary [F116UK] property business or an [F117ordinary overseas] property business] has incurred it in adding insulation against loss of heat to [F118a] building occupied by him for the purposes of [F119the qualifying activity].

(2)This section also applies to expenditure if a person carrying on a qualifying activity consisting of an ordinary [F116UK] [F120property] business [F121or an [F117ordinary overseas] property business] has incurred it in adding insulation against loss of heat to [F122a] building let by him in the course of the business.

[F123(2A)Subsection (2) is subject to section 35 (expenditure on plant or machinery for use in dwelling-house not qualifying expenditure).

(2B)This section does not apply to expenditure within subsection (2) if a deduction for that expenditure is allowable—

(a)under [F124section 251 of CTA 2009], or

(b)under section 312 of ITTOIA 2005,

(deductions for expenditure on energy-saving items).

(2C)For the purposes of subsection (2B), whether such a deduction is allowable is to be determined without regard to subsection (1)(e) of the section in question.]

F125(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F114Word in s. 28 heading omitted (with effect in accordance with s. 71(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 71(6)

F115Words in s. 28(1) substituted (with effect in accordance with s. 71(8) of the amending Act) by Finance Act 2008 (c. 9), s. 71(2)(a)

F116Word in s. 28(1)(2) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(7)(a)

F117Words in s. 28(1)(2) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(7)(b)

F118Word in s. 28(1) substituted (with effect in accordance with s. 71(8) of the amending Act) by Finance Act 2008 (c. 9), s. 71(2)(b)

F119Words in s. 28(1) substituted (with effect in accordance with s. 71(8) of the amending Act) by Finance Act 2008 (c. 9), s. 71(2)(c)

F120Word in s. 28(2) substituted (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), , Sch. 1 para. 531 (with Sch. 2)

F121Words in s. 28(2) inserted (with effect as mentioned in s. 69(2) of the amending Act) by Finance Act 2001 (c. 9), s. 69(1), Sch. 21 para. 1

F122Word in s. 28(2) substituted (with effect in accordance with s. 71(8) of the amending Act) by Finance Act 2008 (c. 9), s. 71(3)

F123S. 28(2A)-(2C) inserted (with effect in accordance with s. 71(8) of the amending Act) by Finance Act 2008 (c. 9), s. 71(4)

F124Words in s. 28(2B)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 480 (with Sch. 2 Pts. 1, 2)

F125S. 28(3) omitted (with effect in accordance with s. 71(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 71(5)

F12629 Fire safetyU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F126S. 29 omitted (with effect in accordance with s. 72(4) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 72(1)

F12730 Safety at designated sports groundsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F127S. 30 repealed (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 33(a)

F12831 Safety at regulated stands at sports groundsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F128S. 31 repealed (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 33(b)

F12932 Safety at other sports groundsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F129S. 32 repealed (with effect in accordance with Sch. 39 para. 35 of the amending Act) by Finance Act 2012 (c. 14), Sch. 39 para. 33(c)

33 Personal securityU.K.

(1)This section applies to expenditure if—

(a)it is incurred by an individual or partnership of individuals in connection with the provision for, or for use by, the individual, or any of the individuals, of a security asset,

(b)the individual or partnership is carrying on a relevant qualifying activity, and

(c)the special threat conditions are met.

(2)The special threat conditions are that—

(a)the asset is provided or used to meet a threat which—

(i)is a special threat to the individual’s personal physical security, and

(ii)arises wholly or mainly because of the relevant qualifying activity, and

(b)the person incurring the expenditure—

(i)has the sole object of meeting that threat in incurring that expenditure, and

(ii)intends the asset to be used solely to improve personal physical security.

(3)If—

(a)the person incurring the expenditure intends the asset to be used solely to improve personal physical security, but

(b)there is another use which is incidental to improving personal physical security,

that other use is ignored for the purposes of this section.

(4)The fact that an asset improves the personal physical security of any member of the family or household of the individual concerned, as well as that of the individual, does not prevent this section from applying.

(5)If—

(a)the asset is not intended to be used solely to improve personal physical security, but the expenditure incurred on it would otherwise be expenditure to which this section applies, and

(b)the person incurring the expenditure intends the asset to be used partly to improve personal physical security,

this section applies only to the proportion of the expenditure attributable to the intended use to improve personal physical security.

(6)In this section “security asset” means an asset which improves personal security; and here “asset”—

(a)does not include—

(i)a car, ship or aircraft, or

(ii)a dwelling or grounds appurtenant to a dwelling, but

(b)subject to paragraph (a), includes equipment, a structure (such as a wall) and an asset which becomes fixed to land.

F130(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)In this section “relevant qualifying activity” means a qualifying activity consisting of—

(a)a trade,

(b)an ordinary [F131UK] [F132property] business,

(c)a [F133UK furnished] holiday lettings business,

(d)an [F134ordinary overseas] property business, F135...

[F136(da)an EEA furnished holiday lettings business, or]

(e)a profession or vocation.

Textual Amendments

F130S. 33(7) omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 13 (with Sch. 11 paras. 30-32)

F131Word in s. 33(8)(b) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(8)(a)

F132 Word in s. 33(8)(b) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 532 (with Sch. 2 )

F133Words in s. 33(8)(c) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(8)(b)

F134Words in s. 33(8)(d) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(8)(c)

F135Word in s. 33(8)(d) omitted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 14 para. 12(8)(d)

F136S. 33(8)(da) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(8)(d)

[F137Expenditure on integral features]U.K.

Textual Amendments

F137Ss. 33A, 33B and cross-heading inserted (with effect in accordance with s. 73(6) of the amending Act) by Finance Act 2008 (c. 9), s. 73(2)

[F13733AExpenditure on provision or replacement of integral featuresU.K.

(1)This section applies where a person carrying on a qualifying activity incurs expenditure on the provision or replacement of an integral feature of a building or structure used by the person for the purposes of the qualifying activity.

(2)This Part (including in particular section 11(4)) applies as if—

(a)the expenditure were capital expenditure on the provision of plant or machinery for the purposes of the qualifying activity, and

(b)the person who incurred the expenditure owned plant or machinery as a result of incurring it.

(3)If the expenditure is qualifying expenditure, it may not be deducted in calculating the income from the qualifying activity.

(4)If the expenditure is not qualifying expenditure, whether it may be so deducted is to be determined without regard to this section.

(5)For the purposes of this section each of the following is an integral feature—

(a)an electrical system (including a lighting system),

(b)a cold water system,

(c)a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system,

(d)a lift, an escalator or a moving walkway,

(e)external solar shading.

(6)The items listed in subsection (5) do not include any asset whose principal purpose is to insulate or enclose the interior of a building or to provide an interior wall, floor or ceiling which (in each case) is intended to remain permanently in place.

(7)The Treasury may by order—

(a)provide that subsection (5) does not include a feature of a building or structure specified in the order, expenditure on which would (if not within subsection (5)) be qualifying expenditure other than special rate expenditure, and

(b)add to the list in subsection (5) a feature of a building or structure expenditure on the provision of which would not (apart from the order) be expenditure on the provision of plant or machinery.

(8)An order under subsection (7) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

Modifications etc. (not altering text)

C50S. 33A(3) excluded by 2005 c. 5, s. 55A(2) (as inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 11(3)

33BMeaning of “replacement” in section 33AU.K.

(1)Expenditure to which this section applies is to be treated for the purposes of section 33A as expenditure on the replacement of an integral feature.

(2)This section applies to expenditure incurred by a person on an integral feature if the amount of the expenditure is more than 50% of the cost of replacing the integral feature at the time the expenditure is incurred.

(3)Subsection (4) applies where—

(a)a person incurs expenditure (“initial expenditure”) on an integral feature which is not more than 50% of the cost of replacing the integral feature at the time it is incurred, but

(b)in the period of 12 months beginning with the initial expenditure being incurred the person incurs further expenditure on the integral feature.

(4)If the aggregate of—

(a)the amount of the initial expenditure, and

(b)the amount (or the aggregate of the amounts) of the further expenditure,

is more than 50% of the cost of replacing the integral feature at the time the initial expenditure was incurred, this section applies to the initial expenditure and the further expenditure.

(5)Where section 33A applies because of subsection (4), all such assessments and adjustments of assessments are to be made as are necessary to give effect to that section.]

Exclusion of certain types of expenditureU.K.

34 Expenditure by MPs and others on accommodationU.K.

(1)Expenditure is not qualifying expenditure if it is incurred by—

(a)a member of the House of Commons,

(b)a member of the Scottish Parliament,

(c)a member of the National Assembly for Wales, or

(d)a member of the Northern Ireland Assembly,

in or in connection with the provision or use of residential or overnight accommodation for the purpose given in subsection (2).

(2)The purpose is enabling the member to perform the duties of a member of the body in or about—

(a)the place where the body sits, or

(b)the constituency or region for which the member has been returned.

[F13834AExpenditure on plant or machinery for long funding leasing not qualifying expenditureU.K.

Expenditure is not qualifying expenditure if it is incurred on the provision of plant or machinery for leasing under a long funding lease (see Chapter 6A).]

Textual Amendments

F138S. 34A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 3

35 Expenditure on plant or machinery for use in dwelling-house not qualifying expenditure in certain casesU.K.

(1)This section applies if a person is carrying on a qualifying activity consisting of—

(a)an ordinary [F139UK] [F140property] business,

(b)an [F141ordinary overseas] property business, or

(c)special leasing of plant or machinery.

(2)The person’s expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house.

(3)If plant or machinery is provided partly for use in a dwelling-house and partly for other purposes, such apportionment of the expenditure incurred in providing that plant or machinery is to be made for the purposes of subsection (2) as is just and reasonable.

Textual Amendments

F139Word in s. 35(1)(a) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(9)(a)

F140Word in s. 35(1)(a) substituted (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), , Sch. 1 para. 533 (with Sch. 2)

F141Words in s. 35(1)(b) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(9)(b)

[F14236 Restriction on qualifying expenditure in case of employment or officeU.K.

(1)Where the qualifying activity consists of an employment or office—

(a)expenditure on the provision of a mechanically propelled road vehicle, or a cycle, is not qualifying expenditure, and

(b)other expenditure is qualifying expenditure only if the plant or machinery is necessarily provided for use in the performance of the duties of the employment or office.

(2) In this section “ cycle ” has the meaning given by section 192(1) of the Road Traffic Act 1988. ]

Textual Amendments

F142S. 36 substituted (with effect as mentioned in s. 59(3)(4) of the amending Act) by Finance Act 2001 (c. 9), s. 59(1)(3)(4)

37 Exclusion where sums payable in respect of depreciationU.K.

(1)Expenditure incurred by a person in providing plant or machinery for the purposes of a qualifying activity is not qualifying expenditure if it appears—

(a)that during the period during which the plant or machinery will be used for the purposes of the qualifying activity sums are, or are to be, payable to that person directly or indirectly, and

(b)that those sums are in respect of, or take account of, the whole of the depreciation of the plant or machinery resulting from its use for those purposes.

(2)Subsection (1) does not apply if the sums fall to be taken into account as income of the person or in calculating the profits of a qualifying activity carried on by him.

38 Production animals etc.U.K.

Expenditure is not qualifying expenditure if it is incurred on—

[F143(a)animals or other creatures to which section 30 of ITTOIA 2005 or section 50 of CTA 2009 (animals kept for trade purposes) applies,

(b)animals or other creatures to which Chapter 8 of Part 2 of ITTOIA 2005 or Chapter 8 of Part 3 of CTA 2009 (herd basis rules) applies, or

(c)shares in animals or creatures such as are mentioned in paragraph (a) or (b).]

Textual Amendments

F143S. 38(a)-(c) substituted for s. 38(a)(b) (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 481 (with Sch. 2 Pts. 1, 2)

[F14438ZAVehicles for which deductions allowed at fixed rate under Part 2 of ITTOIA 2005U.K.

Expenditure is not qualifying expenditure if—

(a)it is incurred in respect of a vehicle in a period, and

(b)a deduction is made for the period in respect of the expenditure under section 94D of ITTOIA 2005 (deduction allowable at fixed rate for expenditure on vehicles).]

Textual Amendments

F144S. 38ZA inserted (with effect in accordance with Sch. 5 para. 6 of the amending Act) by Finance Act 2013 (c. 29), Sch. 5 para. 5(2)

[F145Chapter 3AU.K.AIA qualifying expenditure

Textual Amendments

F145Pt. 2 Ch. 3A inserted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 2

38AAIA qualifying expenditureU.K.

(1)An annual investment allowance is not available unless the qualifying expenditure is AIA qualifying expenditure.

(2)Expenditure is AIA qualifying expenditure if—

(a)it is incurred by a qualifying person on or after the relevant date, and

(b)it is not excluded by any of the general exclusions in section 38B.

(3)Qualifying person” means—

(a)an individual,

(b)a partnership of which all the members are individuals, or

(c)a company.

(4)In determining whether expenditure is AIA qualifying expenditure, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

(5)The relevant date” means—

(a)for corporation tax purposes, 1 April 2008, and

(b)for income tax purposes, 6 April 2008.

38BGeneral exclusions applying to section 38AU.K.

Expenditure within any of the following general exclusions is not AIA qualifying expenditure.

  • General exclusion 1

    The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.

  • General exclusion 2

    The expenditure is incurred on the provision of a car (as defined by section [F146268A]).

  • General exclusion 3

    The expenditure is incurred wholly for the purposes of a ring fence trade in respect of which tax is chargeable under [F147section 330(1) of CTA 2010] (supplementary charge in respect of ring fence trades).

  • General exclusion 4

    The circumstances of the incurring of the expenditure are that—

    (a)

    the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of the trade or business carried on by a person other than the person incurring the expenditure, and

    (b)

    the obtaining of an annual investment allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.

  • General exclusion 5

    Any of the following sections applies—

    • section 13 (use for qualifying activity of plant or machinery provided for other purposes);

    • section 13A (use for other purposes of plant or machinery provided for long funding leasing);

    • section 14 (use for qualifying activity of plant or machinery which is a gift).

    This is subject to section 161 (pre-trading expenditure on mineral exploration and access).]

Textual Amendments

F146Word in s. 38B substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 2 (with Sch. 11 paras. 30-32)

F147Words in s. 38B substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 324 (with Sch. 2)

Chapter 4U.K. First-year qualifying expenditure

GeneralU.K.

39 First-year allowances available for certain types of qualifying expenditure onlyU.K.

A first-year allowance is not available unless the qualifying expenditure is first-year qualifying expenditure under [F148any of the following provisions]

F149. . .F149. . .
F150. . .F150. . .
F149. . .F149. . .
F151. . .F151. . .
[F152section 45Dexpenditure on cars with low CO2 emissions,]
[F153section 45DA expenditure on zero-emission goods vehicles,]
[F154section 45Eexpenditure on plant or machinery for gas refuelling station] F155...
[F156section 45EA expenditure on plant or machinery for electric vehicle charging point]
[F157section 45Fexpenditure on plant and machinery for use wholly in a ring fence trade.]
F158. . .F158. . .
[F159section 45Kexpenditure on plant and machinery for use in designated assisted areas.]
[F160section 45O expenditure on plant and machinery for use in [F161special tax sites].]
[F162section 45S expenditure on plant or machinery in other cases]

Textual Amendments

F148Words in s. 39 inserted (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14), Sch. 30 para. 2(a)

F149S. 39 entries omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(5)(a) (with s. 76(7)(8))

F150S. 39 entry omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(a)

F151Words in s. 39 omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(iii)(a)

F152Words in s. 39 inserted (with effect as mentioned in s. 59 of the amending Act) by Finance Act 2002 (c. 23), s. 59, Sch. 19 para. 2

F153Words in s. 39 inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 2

F154Words in s. 39 inserted (with effect as mentioned in s. 61 of the amending Act) by Finance Act 2002 (c. 23), s. 61, Sch. 20 para. 2

F155Word in s. 39 repealed (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14), Sch. 30 para. 2(b), Sch. 43 Pt. 3(9)

F156Words in s. 39 inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 38(2)

F157Words in s. 39 inserted (with effect as mentioned in s. 63 of the amending Act) by Finance Act 2002 (c. 23), s. 63, Sch. 21 para. 2

F158Words in s. 39 omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(iii)(b)

F159Words in s. 39 inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 2

F160Words in s. 39 inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 2

F162Words in s. 39 inserted (22.2.2024) by Finance (No. 2) Act 2023 (c. 30), s. 7(2) (as amended by Finance Act 2024 (c. 3), s. 1(2)(a))

Types of expenditure which may qualify for first-year allowancesU.K.

F16340 Expenditure incurred for Northern Ireland purposes by small or medium-sized enterprisesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F163Ss. 40-43 omitted (with application in accordance with s. 76(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 76(2) (with s. 76(8))

F16341 Miscellaneous exclusions from section 40 (expenditure for Northern Ireland purposes etc.)U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F163Ss. 40-43 omitted (with application in accordance with s. 76(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 76(2) (with s. 76(8))

F16342 Exclusion of plant or machinery partly for use outside Northern IrelandU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F163Ss. 40-43 omitted (with application in accordance with s. 76(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 76(2) (with s. 76(8))

F16343 Effect of plant or machinery subsequently being primarily for use outside Northern IrelandU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F163Ss. 40-43 omitted (with application in accordance with s. 76(7) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 76(2) (with s. 76(8))

F16444 Expenditure incurred by small or medium-sized enterprisesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F164S. 44 omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(2)

F16545 ICT expenditure incurred by small enterprisesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F165S. 45 omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(3) (with s. 76(7)(8))

F16645A Expenditure on energy-saving plant or machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F166Ss. 45A-45C repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(a)

F16645AASection 45A exclusion: feed-in tariffs and renewable heat incentives U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F166Ss. 45A-45C repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(a)

F16645B Certification of energy-saving plant and machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F166Ss. 45A-45C repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(a)

F16645C Energy-saving components of plant or machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F166Ss. 45A-45C repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(a)

45D Expenditure on cars with low carbon dioxide emissionsU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period beginning with 17th April 2002 and ending with 31st March [F1672025],

(b)it is expenditure on a car which is first registered on or after 17th April 2002 and which is unused and not second-hand,

[F168(c)the car—

(i)is electrically-propelled, or

(ii)has low CO2 emissions, and]

(d)the expenditure is not excluded by section 46 (general exclusions).

[F169(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2) For the purposes of this section [F170a car has low CO2 emissions if it] satisfies the conditions in subsections (3) and (4).

(3) The first condition is that, when the car is first registered, it is so registered on the basis of [F171a qualifying emissions certificate.]

(4) The second condition is that the applicable CO 2 emissions figure [F172in relation to] the car does not exceed [F1730] grams per kilometre driven.

F174(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F174(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)The Treasury may by order amend the amount from time to time specified in subsection (4).

(8)In this section any reference to a car [F175is to a car within the meaning of section 268A, except that it]

(a)includes a reference to a mechanically propelled road vehicle of a type commonly used as a hackney carriage, F176...

F176(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F177(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F177(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F178(11)In this section—

  • “applicable CO2 emissions figure” and “qualifying emissions certificate” have the meanings given in section 268C;

  • electrically-propelled” has the meaning given in section 268B.]

Textual Amendments

F168S. 45D(1)(c) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(2) (with Sch. 11 paras. 30-32)

F169S. 45D(1A) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 64(2)

F170Words in s. 45D(2) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(3) (with Sch. 11 paras. 30-32)

F171Words in s. 45D(3) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(4) (with Sch. 11 paras. 30-32)

F172Words in s. 45D(4) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(5) (with Sch. 11 paras. 30-32)

F173Word in s. 45D(4) substituted (with effect in accordance with art. 1(2)(a) of the amending S.I.) by The Capital Allowances Act 2001 (Car Emissions) (Extension of First-year Allowances) (Amendment) Order 2021 (S.I. 2021/120), arts. 1(1), 3(b)

F174S. 45D(5)(6) omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 14(6) (with Sch. 11 paras. 30-32)

F175Words in s. 45D(8) inserted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(7)(a) (with Sch. 11 paras. 30-32)

F176S. 45D(8)(b) and preceding word omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 14(7)(b) (with Sch. 11 paras. 30-32)

F177S. 45D(9)(10) omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 14(8) (with Sch. 11 paras. 30-32)

F178S. 45D(11) inserted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 14(9) (with Sch. 11 paras. 30-32)

[F17945DAExpenditure on zero-emission goods vehiclesU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period of [F18015 years] beginning with the relevant date,

(b)it is incurred on the provision of a zero-emission goods vehicle,

(c)the vehicle is unused and not second-hand,

(d)the vehicle is registered, and

(e)the expenditure is not excluded by section 46 (general exclusions).

[F181(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2)For the purposes of subsection (1)(d) it does not matter whether the vehicle is first registered before or after the expenditure is incurred.

(3)In this section—

  • goods vehicle” means a mechanically propelled road vehicle which is of a design primarily suited for the conveyance of goods or burden of any description;

  • the relevant date” means—

    (a)

    in the case of expenditure incurred by a person within the charge to corporation tax, 1 April 2010, and

    (b)

    in the case of expenditure incurred by a person within the charge to income tax, 6 April 2010;

  • zero-emission goods vehicle” means a goods vehicle which cannot in any circumstances emit CO2 by being driven.

(4)The Treasury may by order amend this Chapter so as to provide for specified descriptions of vehicles to be treated, or not to be treated, as goods vehicles for the purposes of this section.

(5)This section is subject to section 45DB.

Textual Amendments

F179Ss. 45DA, 45DB inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 3

F181S. 45DA(1A) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 64(3)

45DBExclusions from allowances under section 45DAU.K.

(1)Expenditure incurred by a person is not first-year qualifying expenditure under section 45DA if it is within subsection (2), (4) or (6).

(2)Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45DA allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3).

(3)An undertaking is within this subsection if one or both of the following conditions are met—

(a)it is reasonable to assume that the undertaking would be regarded as [F182an undertaking in difficulty for the purposes of the General Block Exemption Regulation];

(b)the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market).

(4)Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity—

(a)in the fishery or aquaculture sector, as covered by [F183Regulation (EU) No 1379/2013 of the European Parliament and of the Council], or

(b)relating to the management of waste of undertakings.

(5)In subsection (4)(b) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person.

(6)Expenditure is within this subsection to the extent that it is taken into account for the purposes of a relevant grant, or relevant payment, made towards that expenditure.

(7)A grant or payment is relevant if it is—

(a)a F184... State aid, other than an allowance under this Part, or

(b)a grant or subsidy, other than a F184... State aid, which the Treasury by order declares to be relevant for the purposes of the withholding of a section 45DA allowance.

(8)If a relevant grant or relevant payment towards the expenditure is made after the making of a section 45DA allowance, the allowance is to be withdrawn F185....

(9)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8).

(10)Any such assessment or adjustment is not out of time if it is made within 3 years of the end of the chargeable period in which the grant or payment was made.

(11)In this section—

  • General Block Exemption Regulation” means Commission Regulation [F186(EU) No 651/2014] (General block exemption Regulation) [F187as it had effect in the United Kingdom immediately before IP completion day];

  • “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council;

  • F188. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • section 45DA allowance” means a first year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA;

  • undertaking” means—

    (a)

    an autonomous enterprise, or

    (b)

    an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any),

    and for this purpose “enterprise”, “autonomous enterprise”, “partner enterprises” and “linked enterprises” have the meaning given by Annex 1 to the General Block Exemption Regulation.

[F189(11A)Nothing in this section limits references to “State aid” to State aid which is required to be notified to and approved by the European Commission.]

(12)The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instrument replacing—

(a)the General Block Exemption Regulation,

(b)the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02),

[F190(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,]

(d)Directive 2006/12/EC of the European Parliament and of the Council, or

(e)the Treaty on the Functioning of the European Union.]

Textual Amendments

F179Ss. 45DA, 45DB inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 3

F182Words in s. 45DB(3)(a) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 2(2)

F183Words in s. 45DB(4)(a) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 2(3)

F184Word in s. 45DB(7) omitted (with effect in accordance with s. 45(8)(9) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 45(4)

F185Words in s. 45DB(8) omitted (with effect in accordance with s. 45(8)(9) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 45(5)

F186Words in s. 45DB(11) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 2(4)

F188Words in s. 45DB(11) omitted (with effect in accordance with s. 45(8)(9) of the amending Act) by virtue of Finance Act 2015 (c. 11), s. 45(6)

F189S. 45DB(11A) inserted (with effect in accordance with s. 45(8)(9) of the amending Act) by Finance Act 2015 (c. 11), s. 45(7)

F190S. 45DB(12)(c) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 2(5)

[F19145E Expenditure on plant or machinery for gas refuelling stationU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period beginning with 17th April 2002 and ending with 31st March [F1922025],

(b)it is expenditure on plant or machinery for a gas refuelling station where the plant or machinery is unused and not second-hand, and

(c)it is not excluded by section 46 (general exclusions).

[F193(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2)For the purposes of this section expenditure on plant or machinery for a gas refuelling station is expenditure on plant or machinery installed at a gas refuelling station for use solely for or in connection with refuelling vehicles with natural gas[F194, biogas] or hydrogen fuel.

(3)For the purposes of subsection (2) the plant or machinery which is for use for or in connection with refuelling vehicles with natural gas[F194, biogas] or hydrogen fuel includes—

(a)any storage tank for natural gas [F194, biogas] or hydrogen fuel,

(b)any compressor, pump, control or meter used for or in connection with refuelling vehicles with natural gas[F194, biogas] or hydrogen fuel, and

(c)any equipment for dispensing natural gas[F194, biogas] or hydrogen fuel to the fuel tank of a vehicle.

(4)For the purposes of this section—

  • [F195biogas” means gas produced by the anaerobic conversion of organic matter and used for propelling vehicles;]

  • gas refuelling station” means any premises, or that part of any premises, where vehicles are refuelled with natural gas[F194, biogas] or hydrogen fuel;

  • hydrogen fuel” means a fuel consisting of gaseous or cryogenic liquid hydrogen which is used for propelling vehicles;

  • vehicle” means a mechanically propelled road vehicle.]

Textual Amendments

F191S. 45E inserted (with effect as mentioned in s. 61 of the amending Act) by Finance Act 2002 (c. 23), s. 61, Sch. 20 para. 3

F193S. 45E(1A) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 64(4)

F194Word in s. 45E inserted (with effect in accordance with s. 78(5) of the amending Act) by Finance Act 2008 (c. 9), s. 78(3)

F195Words in s. 45E(4) inserted (with effect in accordance with s. 78(5) of the amending Act) by Finance Act 2008 (c. 9), s. 78(4)

[F19645EAExpenditure on plant or machinery for electric vehicle charging pointU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the relevant period,

(b)it is expenditure on plant or machinery for an electric vehicle charging point where the plant or machinery is unused and not second-hand, and

(c)it is not excluded by section 46 (general exclusions).

(2)For the purposes of this section expenditure on plant or machinery for an electric vehicle charging point is expenditure on plant or machinery installed solely for the purpose of charging electric vehicles.

(3)The “relevant period” is the period beginning with 23 November 2016 and ending with—

(a)in the case of expenditure incurred by a person within the charge to corporation tax, 31 March [F1972025], and

(b)in the case of expenditure incurred by a person within the charge to income tax, 5 April [F1982025].

(4)The Treasury may by regulations amend subsection (3) so as to extend the relevant period.

(5)In this section—

  • electric vehicle” means a road vehicle that can be propelled by electrical power (whether or not it can also be propelled by another kind of power);

  • electric vehicle charging point” means a facility for charging an electric vehicle.]

Textual Amendments

F196S. 45EA inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 38(3)

F197Word in s. 45EA(3)(a) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 9

F198Word in s. 45EA(3)(b) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 9

[F19945F Expenditure on plant and machinery for use wholly in a ring fence tradeU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred on or after 17th April 2002,

(b)it is incurred by a company,

(c)it is incurred on the provision of plant or machinery for use wholly for the purposes of a ring fence trade, and

(d)it is not excluded by section 46 (general exclusions).

(2)This section is subject to section 45G (plant or machinery used for less than five years in a ring fence trade).

(3) In this section “ ring fence trade ” means a ring fence trade in respect of which tax is chargeable under [F200section 330(1) of CTA 2010] (supplementary charge in respect of ring fence trades). ]

Textual Amendments

F199S. 45F inserted (with effect as mentioned in s. 63 of the amending Act) by Finance Act 2002 (c. 23), s. 63, Sch. 21 para. 3

F200Words in s. 45F(3) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 325 (with Sch. 2)

[F20145G Plant or machinery used for less than five years in a ring fence tradeU.K.

(1)Expenditure incurred by a company on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45F if the plant or machinery—

(a)is at no time in the relevant period used in a ring fence trade carried on by the company or a company connected with it, or

(b)is at any time in the relevant period used for a purpose other than that of a ring fence trade carried on by the company or a company connected with it.

(2) For the purposes of this section “ the relevant period ” means whichever of the following periods, beginning with the incurring of the expenditure, first ends, namely—

(a)the period ending with the fifth anniversary of the incurring of the expenditure, or

(b)the period ending with the day preceding the first occasion on which the plant or machinery, after becoming owned by the company which incurred the expenditure, is not owned by a company which is either that company or a company connected with it.

(3)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).

(4)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, he must give notice to [F202an officer of Revenue and Customs] specifying how the return needs to be amended.

(5)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(6) In this section “ ring fence trade ” has the same meaning as in section 45F. ]

Textual Amendments

F201S. 45G inserted (with effect as mentioned in s. 63 of the amending Act) by Finance Act 2002 (c. 23), s. 63, Sch. 21 para. 4

F20345HExpenditure on environmentally beneficial plant or machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F203Ss. 45H-45J repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(b)

F20345ICertification of environmentally beneficial plant and machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F203Ss. 45H-45J repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(b)

F20345JEnvironmentally beneficial components of plant or machineryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F203Ss. 45H-45J repealed (with effect in accordance with s. 33(5) of the amending Act) by Finance Act 2019 (c. 1), s. 33(1)(b)

[F20445KExpenditure on plant and machinery for use in designated assisted areasU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred by a company on the provision of plant or machinery for use primarily in an area which at the time the expenditure is incurred is a designated assisted area,

(b)it is incurred in the period F205... beginning with [F206the date on which the area is (or is treated as) designated under subsection (2)(a)] [F207and ending with whichever is the later of the day immediately before the eighth anniversary of that date or 31st March 2021],

(c)Conditions A to E are met.

[F208(1A)The Treasury may by order amend subsection (1)(b) so as to extend the period specified.]

(2)Designated assisted area” means an area which—

(a)is designated by an order made by the Treasury, and

(b)falls wholly within an assisted area.

(3)An area may be designated by an order under subsection (2)(a) only if at the time the order is made—

(a)the area falls wholly within an enterprise zone, and

(b)a memorandum of understanding, in respect of the area, relating to the availability of allowances in respect of expenditure to which this section applies has been entered into by the Treasury and the responsible authority for the area.

(4)An order made under subsection (2)(a) may provide that an area designated by the order is to be treated as having been so designated at times falling before the order is made.

(5)But where an area has previously been designated by an order under subsection (2)(a), section 14 of the Interpretation Act 1978 does not apply, by virtue of subsection (4), so as to imply a power to make an order (“the new order”) treating that area (or any part of it) as if it were not so designated at times falling before the new order is made.

(6)Condition A is that the company is within the charge to corporation tax.

(7)Condition B is that the expenditure is incurred for the purposes of a qualifying activity within section 15(1)(a) or (f).

(8)Condition C is that the expenditure is incurred for the purposes of—

(a)a business of a kind not previously carried on by the company,

(b)expanding a business carried on by the company, or

(c)starting up an activity which relates to a fundamental change in a product or production process of, or service provided by, a business carried on by the company.

[F209(8A)Condition C is met by virtue of subsection (8)(c) only if the amount of the expenditure exceeds the amount by which the relevant plant or machinery is depreciated in the period of 3 years ending immediately before the beginning of the chargeable period in which the expenditure is incurred.

(8B)Relevant plant or machinery” means the plant or machinery being used at the end of the period of 3 years mentioned in subsection (8A) for the purposes of the product, process or service mentioned in subsection (8)(c).]

(9)Condition D is that the plant or machinery is unused and not second-hand.

(10)Condition E is that the expenditure is not replacement expenditure.

(11)Replacement expenditure” means expenditure incurred on the provision of plant or machinery (“new plant or machinery”) intended to perform the same or a similar function, for the purposes of the qualifying activity of the company, as other plant or machinery (“replaced plant or machinery”)—

(a)on which the company has previously incurred qualifying expenditure, and

(b)which has been superseded by the new plant or machinery.

(12)But if and to the extent that—

(a)the expenditure is incurred on the provision of new plant or machinery that is capable of and intended to perform a significant additional function, when compared to the replaced plant or machinery, and

(b)the additional function enhances the capacity or productivity of the qualifying activity in question,

so much of the expenditure as is attributable to the additional function is not to be regarded as replacement expenditure.

(13)The part of the expenditure attributable to the additional function is to be determined on a just and reasonable basis.

(14)In this section—

  • assisted area” means—

    (a)

    an area specified as a development area under section 1 of the Industrial Development Act 1982, or

    (b)

    Northern Ireland;

  • enterprise zone” means an area recognised by the Treasury as an area in respect of which there is a special focus on economic development and identified on a map published by the Treasury for the purposes of this section;

  • “the responsible authority”, for an area, means—

    (a)

    if the area is in England, a local authority for all or part of the area or two or more such local authorities,

    (b)

    if the area is in Scotland, the Scottish Ministers,

    (c)

    if the area is in Wales, the Welsh Ministers, and

    (d)

    if the area is in Northern Ireland, the Department of Enterprise, Trade and Investment in Northern Ireland.

(15)The Treasury may by order amend the definition of “assisted area” in subsection (14) in consequence of any changes made to the areas in the United Kingdom granted assisted area status by virtue of Article 107(3) of the Treaty on the Functioning of the European Union.

(16)This section is subject to—

  • section 45L (plant or machinery partly for use outside designated assisted areas),

  • section 45M (exclusions from section 45K allowances),

  • section 45N (effect of plant or machinery subsequently being primarily used in an area other than a designated assisted area), and

  • section 46 (general exclusions).

Textual Amendments

F204Ss. 45K-45N inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 3

F206Words in s. 45K(1)(b) substituted (15.9.2016) by Finance Act 2016 (c. 24), s. 69

F208S. 45K(1A) inserted (17.7.2014) by Finance Act 2014 (c. 26), s. 64(5)(b)

F209S. 45K(8A)(8B) inserted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 3

45LExclusion of plant or machinery partly for use outside designated assisted areasU.K.

(1)Expenditure on plant or machinery is not first-year qualifying expenditure under section 45K if—

(a)at the time when it is incurred, the company incurring it intends the plant or machinery to be used partly in a non-designated area, and

(b)the main purpose, or one of the main purposes, for which any person is a party to the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use in a non-designated area.

(2)For the purposes of subsection (1)(b), the part of the expenditure that is attributable to that intended use in a non-designated area is to be determined on a just and reasonable basis.

(3)In this section—

  • non-designated area” means an area which is not a designated assisted area within the meaning of section 45K;

  • the relevant arrangements” means—

    (a)

    the transaction under which the expenditure is incurred, and

    (b)

    any scheme or arrangements of which that transaction forms part.

Textual Amendments

F204Ss. 45K-45N inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 3

45MExclusions from allowances under section 45KU.K.

(1)Expenditure incurred by a person is not first-year qualifying expenditure under section 45K if it is within subsection (2), (4), [F210(7) or (7A)].

(2)Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45K allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3).

(3)An undertaking is within this subsection if one or both of the following conditions are met—

(a)it is reasonable to assume that the undertaking would be regarded as [F211an undertaking in difficulty for the purposes of the General Block Exemption Regulation];

(b)the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market).

(4)Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity—

(a)in the fishery or aquaculture sector, as covered by [F212Regulation (EU) No 1379/2013 of the European Parliament and of the Council],

(b)in the coal sector, steel sector, shipbuilding sector or synthetic fibres sector,

[F213(ba)in the transport sector or related infrastructure,

(bb)relating to energy generation, distribution or infrastructure,

(bc)relating to the development of broadband networks,]

(c)relating to the management of waste of undertakings, or

(d)relating to—

(i)the primary production of agricultural products,

(ii)on-farm activities necessary for preparing an animal or plant product for the first sale, or

(iii)the first sale of agricultural products by a primary producer to wholesalers, retailers or processors, in circumstances where that sale does not take place on separate premises reserved for that purpose.

[F214(4A)Expressions used in subsection (4)(b), (ba), (bb) or (bc) and in the General Block Exemption Regulation have the same meaning as in that Regulation.]

(5)In subsection (4)(c) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person.

F215(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)Expenditure is within this subsection if a relevant grant or relevant payment is made towards—

(a)that expenditure, or

(b)any other expenditure which is incurred by any person in respect of the same designated assisted area, and on the same single investment project, as that expenditure.

[F216(7A)Expenditure is within this subsection if—

(a)the area by reference to which the condition in section 45K(1)(a) is met is not an area which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union,

(b)the condition in section 45K(8)(a) is not met in relation to the expenditure, and

(c)at the time the expenditure is incurred the company is not an SME for the purposes of the General Block Exemption Regulation.]

(8)A section 45K allowance made in respect of first-year qualifying expenditure is to be withdrawn if—

(a)after it is made, a relevant grant or relevant payment is made towards that expenditure, or

(b)within the period of 3 years beginning when that expenditure was incurred, a relevant grant or relevant payment is made towards any other expenditure which is incurred by any person in respect of the same designated assisted area, and on the same single investment project, as that expenditure.

(9)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8).

(10)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(11)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(12)In this section—

  • agricultural product”, [F217has] the same meaning as in the General Block Exemption Regulation;

  • General Block Exemption Regulation” means Commission Regulation [F218(EU) No 651/2014] (General block exemption Regulation)[F219as it had effect in the United Kingdom immediately before IP completion day];

  • “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council;

  • relevant grant or relevant payment” means a grant or payment which is—

    (a)

    a State aid, other than an allowance under this Part, or

    (b)

    a grant or subsidy, other than a State aid, which the Treasury by order declares to be relevant for the purposes of the witholding of a section 45K allowance;

  • section 45K allowance” means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45K;

  • single investment project” has the same meaning as in the General Block Exemption Regulation;

  • undertaking” means—

    (a)

    an autonomous enterprise, or

    (b)

    an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any),

    and for this purpose “enterprise”, “autonomous enterprise”, “partner enterprises” and “linked enterprises” have the meaning given by Annex 1 to the General Block Exemption Regulation.

(13)Nothing in this section limits references to “State aid” to State aid which is required to be notified to and approved by the European Commission.

(14)For the purposes of this section references to expenditure incurred in respect of a designated assisted area includes expenditure incurred on the provision of things for use primarily in that area or on services to be provided primarily in that area.

(15)The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instruments replacing—

(a)the General Block Exemption Regulation,

(b)the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02),

[F220(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,]

(d)Directive 2006/12/EC of the European Parliament and of the Council, or

(e)the Treaty on the Functioning of the European Union.

Textual Amendments

F204Ss. 45K-45N inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 3

F210Words in s. 45M(1) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(2)

F211Words in s. 45M(3)(a) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(3)

F212Words in s. 45M(4)(a) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(4)(a)

F213Ss. 45M(4)(ba)-(bc) inserted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(4)(b)

F214S. 45M(4A) inserted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(5)

F215S. 45M(6) omitted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by virtue of Finance Act 2014 (c. 26), Sch. 13 para. 4(6)

F216S. 45M(7A) inserted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(7)

F217Word in s. 45M(12) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(8)(a)

F218Words in s. 45M(12) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(8)(b)

F220S. 45M(15)(c) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 4(9)

45NEffect of plant or machinery subsequently being primarily for use outside designated assisted areasU.K.

(1)Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45K if, at any relevant time—

(a)the primary use to which the plant and machinery is put is other than in an area which was a [F221relevant area] at the time the expenditure was incurred, or

(b)the plant or machinery is held for use otherwise than primarily in an area which was [F222a relevant] area at that time.

(2)Relevant time” means a time which—

(a)falls within the relevant period, and

(b)is a time when the plant or machinery is owned by—

(i)the person who incurred the expenditure, or

(ii)a person who is, or at any time in that period has been, connected with that person.

(3)The relevant period” means the period of 5 years beginning with—

(a)the day on which the plant or machinery in question is first brought into use for the purposes of a qualifying activity carried on by the company, or

(b)if earlier, the day on which it is first held for such use.

[F223(3A)“Relevant area” means—

(a)in relation to expenditure which would be within subsection (7A) of section 45M if paragraph (a) of that subsection were omitted, a designated assisted area within the meaning of section 45K which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union, and

(b)in relation to any other expenditure, a designated assisted area within the meaning of section 45K.]

(4)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).

(5)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(6)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.]

Textual Amendments

F204Ss. 45K-45N inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 3

F221Words in s. 45N(1) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 5(2)(a)

F222Words in s. 45N(1) substituted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 5(2)(b)

F223S. 45N(3A) inserted (with effect in accordance with Sch. 13 para. 8 of the amending Act) by Finance Act 2014 (c. 26), Sch. 13 para. 5(3)

[F22445OExpenditure on plant and machinery for use in [F225special tax sites] U.K.

(1)Expenditure incurred by a company on the provision of plant or machinery is first-year qualifying expenditure if conditions A to E are met.

(2)Condition A is that the plant or machinery is for use primarily in an area which, at the time the expenditure is incurred, is a [F225special tax site].

(3)Condition B is that the plant or machinery is unused and is not second-hand.

(4)Condition C is that the expenditure is incurred for the purposes of a qualifying activity within section 15(1)(a) or (f).

(5)Condition D is that the expenditure is incurred on or before [F226the applicable sunset date in relation to the special tax site concerned (as to which see section 332(4) and (5) of F(No.2)A 2023)].

(6)Condition E is that the company is within the charge to corporation tax.

(7)This section is subject to—

  • regulations under section 45P,

  • section 45Q (exclusion of plant or machinery partly for use outside [F225special tax sites]),

  • [F227section 45R (effect of failing to comply with ongoing requirements) and regulations under that section, and]

  • section 46 (general exclusions).

Textual Amendments

F224Ss. 45O-45R inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 3

F226Words in s. 45O(5) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 332(2)(4)

F227Words in s. 45O(7) substituted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 2

45PPower to amend conditionsU.K.

(1)The Treasury may by regulations change the conditions that must be met in order for expenditure to be first-year qualifying expenditure under section 45O (whether by adding, removing or altering conditions).

(2)Regulations under this section may not remove the requirement for the plant or machinery to be for use primarily in an area which, at the time the expenditure is incurred, is a [F225special tax site].

(3)Regulations under this section may, among other things—

(a)make provision by reference to the expenditure, the plant or machinery, the company that incurred the expenditure or a person who is or has been connected with that company;

(b)impose conditions relating to accounts or other records;

(c)impose other conditions requiring a person to take steps specified in the regulations;

(d)make different provision for different purposes;

(e)include incidental, supplementary, consequential, transitional or transitory provision.

(4)Regulations under this section—

(a)may amend, repeal or otherwise modify section 45O and other provisions of this Part, and

(b)where made under subsection (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.

Textual Amendments

F224Ss. 45O-45R inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 3

45QExclusion of plant or machinery partly for use outside [F225special tax sites] U.K.

(1)This section applies if—

(a)at the time when expenditure on plant or machinery is incurred, the company incurring it intends the plant or machinery to be used partly in an area which is not a [F225special tax site], and

(b)the main purpose, or one of the main purposes, for which a person is party to the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use in an area which is not a [F225special tax site] ([F228the “non-qualifying part” of] the expenditure).

(2)The [F229non-qualifying part] of the expenditure is not first-year qualifying expenditure under section 45O.

(3)For the purposes of this section, the [F230non-qualifying part] of the expenditure is to be determined on a just and reasonable basis.

(4)In this section, “the relevant arrangements” means—

(a)the transaction under which the expenditure on the plant or machinery is incurred, and

(b)any scheme or arrangements of which that transaction forms part.

Textual Amendments

F224Ss. 45O-45R inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 3

45REffect of [F231failing to comply with ongoing requirements] U.K.

(1)Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O if, at any relevant time—

(a)the primary use to which the plant or machinery is put is other than in an area which, at the time the expenditure was incurred, was a [F225special tax site], or

(b)the plant or machinery is held for use otherwise than primarily in an area which was a [F225special tax site] at that time.

(2)Relevant time” means a time within the relevant period when the plant or machinery is owned by—

(a)the company that incurred the expenditure, or

(b)a person who is, or at any time in that period has been, connected with that company.

(3)The relevant period” means the period of 5 years beginning with—

(a)the day on which the plant or machinery in question is first brought into use for the purposes of a qualifying activity carried on by the company, or

(b)if earlier, the day on which it is first held for such use.

[F232(3A)The Treasury may by regulations make provision adding, removing or altering, or otherwise about, circumstances in which expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O.

(3B)The power to make regulations under subsection (3A) may be exercised only in relation to expenditure incurred on or after the date on which the regulations come into force.

(3C)Subsections (3) and (4) of section 45P apply in relation to regulations under subsection (3A) as they apply in relation to regulations under that section.]

(4)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1) [F233or regulations under subsection (3A)].

(5)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section [F234or of regulations under subsection (3A)], that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(6)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section [F235or of regulations under subsection (3A)].]

Textual Amendments

F224Ss. 45O-45R inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 3

F233Words in s. 45R(4) inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 3(4)

F234Words in s. 45R(5) inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 3(5)

F235Words in s. 45R(6) inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 3(6)

[F23645S Expenditure on plant or machinery in other casesU.K.

Expenditure is first-year qualifying expenditure if—

(a)it is incurred on or after 1 April 2023,

(b)it is incurred by a company within the charge to corporation tax,

(c)it is expenditure on plant or machinery which is unused and not second-hand, and

(d)it is not excluded by section 45T (exclusion of expenditure under disqualifying arrangements) or 46 (general exclusions).]

Textual Amendments

F236Ss. 45S, 45T inserted (22.2.2024) by Finance (No. 2) Act 2023 (c. 30), s. 7(3) (as amended by Finance Act 2024 (c. 3), s. 1(1)(2)(a))

[F23645T Exclusion of expenditure incurred under disqualifying arrangementsU.K.

(1)Expenditure is not first-year qualifying expenditure under section 45S if the expenditure is incurred directly or indirectly in consequence of, or otherwise in connection with, disqualifying arrangements.

(2)Arrangements are “disqualifying arrangements” for the purposes of this section if—

(a)the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage connected with expenditure being first-year qualifying expenditure under section 45S (including securing the advantage by avoiding a balancing charge under section 59A or 59B or reducing the amount or timing of such a charge), and

(b)it is reasonable, taking account of all the relevant circumstances—

(i)to conclude that the arrangements are, or include steps that are, contrived, abnormal or lacking a genuine commercial purpose, or

(ii)to regard the arrangements as circumventing the intended limits of relief under this Act or otherwise exploiting shortcomings in this Act.

(3)In this section “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

Textual Amendments

F236Ss. 45S, 45T inserted (22.2.2024) by Finance (No. 2) Act 2023 (c. 30), s. 7(3) (as amended by Finance Act 2024 (c. 3), s. 1(1)(2)(a))

46 General exclusions F237...U.K.

(1)Expenditure within any of the general exclusions in subsection (2) is not first-year qualifying expenditure under [F238any of the following provisions]

  • F239. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F240. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F239. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • F241. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • [F242 section 45D (expenditure on cars with low CO2 emissions),]

  • [F243section 45DA (expenditure on zero-emission goods vehicles), ]

  • [F244section 45E (expenditure on plant or machinery for gas refuelling station)], F245...

  • [F246section 45EA (expenditure on plant or machinery for electric vehicle charging point)]

  • [F247section 45F (expenditure on plant and machinery for use wholly in a ring fence trade)]

    F241. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • [F248section 45K (expenditure on plant and machinery for use in designated assisted areas).]

  • [F249section 45O (expenditure on plant and machinery for use in [F250special tax sites]).]

  • [F251section 45S (expenditure on plant or machinery in other cases)]

(2)The general exclusions are—

  • General exclusion 1

    The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.

  • General exclusion 2

    The expenditure is incurred on the provision of a car (as defined by section [F252268A]).

  • F253...

  • F254...

  • General exclusion 5

    The expenditure would be long-life asset expenditure but for paragraph 20 of Schedule 3 (transitional provisions).

  • General exclusion 6

    The expenditure is on the provision of plant or machinery for leasing (whether in the course of a trade or otherwise).

    For this purpose, the letting of a ship on charter, or of any other asset on hire, is to be regarded as leasing (whether or not it would otherwise be so regarded).

  • General exclusion 7

    The circumstances of the incurring of the expenditure are that—

    (a)

    the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of a trade or business carried on by a person other than the person incurring the expenditure, and

    (b)

    the obtaining of a first-year allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.

  • General exclusion 8

    [F255Any] of the following sections applies—

    • section 13 (use for qualifying activity of plant or machinery provided for other purposes);

    • [F256section 13A (use for other purposes of plant or machinery provided for long funding leasing);]

    • section 14 (use for qualifying activity of plant or machinery which is a gift).

    This is subject to section 161 (pre-trading expenditure on mineral exploration and access).

[F257(3)Subsection (1) is subject to the following provisions of this section.

(4)General exclusion 2 does not prevent expenditure being first-year qualifying expenditure under section 45D.]

[F258(4A)General exclusion 6 does not prevent expenditure being first-year qualifying expenditure under section 45S if the plant or machinery is provided for leasing under an excluded lease of background plant or machinery for a building.]

F259(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F259(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F237Words in s. 46 heading omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(5)(b)(ii) (with s. 76(7)(8))

F238 Words in s. 46(1) inserted (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 4(1)(a)

F239S. 46(1) entries omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(5)(b)(i) (with s. 76(7)(8))

F240S. 46(1) entry omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(b)

F241Words in s. 46(1) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(iv)(a)

F242Entry in s. 46(1) relating to s. 45D inserted (with effect as mentioned in s. 59 of the amending Act) by Finance Act 2002 (c. 23), s. 59, Sch. 19 para. 4(2)

F243Words in s. 46(1) inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 4

F244Entry in s. 46(1) relating to s. 45E inserted (with effect as mentioned in s. 61of the amending Act) by Finance Act 2002 (c. 23), s. 61, Sch. 20 para. 4

F245 Word in s. 46(1) repealed (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 4(1)(b) , 43 Pt. 3(9)

F246Words in s. 46(1) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 38(4)

F247Entry in s. 46(1) relating to s. 45F inserted (with effect as mentioned in s. 63 of the amending Act) by Finance Act 2002 (c. 23), s. 63, Sch. 21 para. 5

F248Words in s. 46(1) inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 4

F249Words in s. 46(1) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 4

F251Words in s. 46(1) inserted (22.2.2024) by virtue of Finance (No. 2) Act 2023 (c. 30), s. 7(4)(a) (as amended by Finance Act 2024 (c. 3), s. 1(2)(a))

F252Word in s. 46(2) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 3 (with Sch. 11 paras. 30-32)

F253Words in s. 46(2) omitted (with effect in accordance with s. 70(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), s. 70(1)(a)

F254Words in s. 46(2) omitted (with effect in accordance with s. 70(2) of the amending Act) by virtue of Finance Act 2013 (c. 29), s. 70(1)(b)

F255Word in s. 46(2) substituted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 4(2)(a)

F256Words in s. 46(2) inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 4(2)(b)

F257Entry relating to s. 46(3)(4) inserted (with effect as mentioned in s. 59 of the amending Act) by Finance Act 2002 (c. 23), s. 59, Sch. 19 para. 4(3)

F259S. 46(5)(6) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(iv)(b)

Modifications etc. (not altering text)

C51S. 46(2) restricted (10.6.2021) by Finance Act 2021 (c. 26), s. 9(9)

Expenditure of small or medium-sized enterprisesU.K.

F26047 Expenditure of small or medium-sized enterprises: companiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F260Ss. 47-49 omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(c)

F26048 Expenditure of small or medium-sized enterprises: businessesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F260Ss. 47-49 omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(c)

F26049 Whether company is a member of a large or medium-sized groupU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F260Ss. 47-49 omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(c)

SupplementaryU.K.

50 Time when expenditure is incurredU.K.

In determining whether expenditure is first-year qualifying expenditure under this Chapter, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

F26151 Disclosure of information between UK tax authoritiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F261S. 51 omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(5)(c) (with s. 76(7)(8))

Chapter 5U.K. Allowances and charges

Modifications etc. (not altering text)

C52 Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 para. 21(2) (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1

C53 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 para. 10 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1

C54Pt. 2 modified (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 7

[F262Annual investment allowanceU.K.

Textual Amendments

F262Ss. 51A-51N and cross-heading inserted (with effect in accordance with Sch. 24 para. 23 to the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 3

51AEntitlement to annual investment allowanceU.K.

(1)A person is entitled to an allowance (an “annual investment allowance”) in respect of AIA qualifying expenditure if—

(a)the expenditure is incurred in a chargeable period to which this Act applies, and

(b)the person owns the plant and machinery at some time during that chargeable period.

(2)Any annual investment allowance is made for the chargeable period in which the AIA qualifying expenditure is incurred.

(3)If the AIA qualifying expenditure incurred in a chargeable period is less than or equal to the maximum allowance, the person is entitled to an annual investment allowance in respect of all the AIA qualifying expenditure.

(4)If the AIA qualifying expenditure incurred in a chargeable period is more than the maximum allowance, the person is entitled to an annual investment allowance in respect of so much of the AIA qualifying expenditure as does not exceed the maximum allowance.

(5)The maximum allowance is [F263£1,000,000].

(6)But if the chargeable period is more or less than a year, the maximum allowance is proportionately increased or reduced.

(7)A person may claim an annual investment allowance in respect of all the AIA qualifying expenditure in respect of which the person is entitled to an allowance, or in respect of only some of it.

(8)The Treasury may by order substitute for the amount for the time being specified in subsection (5) such [F264greater] amount as it thinks fit.

(9)An order under subsection (8) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

(10)This section is subject to—

(a)sections 51B to 51N (restrictions on entitlement to annual investment allowance),

[F265section 70DA(2) (transfer and long funding leaseback: no annual investment allowance for lessee),]

(b)section 205 (reduction of allowance if plant or machinery provided partly for purposes other than those of qualifying activity),

(c)section 210 (reduction of allowance if it appears that a partial depreciation subsidy is or will be payable), and

(d)sections 217, 218A[F266, 229A(2)] and 241 (anti-avoidance: no allowance in certain cases),

and needs to be read with section 236 (additional VAT liabilities).

Textual Amendments

F263Sum in s. 51A(5) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 8(2)(a)

F264Word in s. 51A(8) substituted (with effect in accordance with s. 11(5)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 11(3)

F265Words in s. 51A(10) inserted (as an unnumbered paragraph) (with effect in accordance with Sch. 32 para. 17 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 12

F266Word in s. 51A(10) inserted (with effect in accordance with Sch. 32 para. 22 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 18

Modifications etc. (not altering text)

C55S. 51A(5) modified (temp.) (17.7.2013) by Finance Act 2013 (c. 29), s. 7, Sch. 1

C56S. 51A(5) modified (temp.) (17.7.2014) by Finance Act 2014 (c. 26), s. 10, Sch. 2

C57S. 51A(5) modified (temp.) (12.2.2019) by Finance Act 2019 (c. 1), s. 32, Sch. 13 (as amended by Finance Act 2021 (c. 26), s. 15(1))

51BFirst restriction: companiesU.K.

(1)A company is entitled to a single annual investment allowance in respect of all the qualifying activities carried on by the company in a chargeable period.

(2)The company may allocate the annual investment allowance to the relevant AIA qualifying expenditure as it thinks fit.

(3)The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the company in the chargeable period mentioned in subsection (1).

(4)This section is subject to sections 51C, 51D and 51E.

51CSecond restriction: groups of companiesU.K.

(1)This section applies in relation to—

(a)a company which, in a financial year, is a parent undertaking of one or more other companies, and

(b)those other companies.

(2)The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3)The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4)The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

(5)A company (“P”) is a parent undertaking of another company (“C”) in a financial year if P is a parent undertaking of C at the end of C's chargeable period ending in that financial year.

(6)In this section “parent undertaking” has the same meaning as in section 1162 of the Companies Act 2006.

(7)This section is subject to section 51D.

51DThird restriction: groups of companies under common controlU.K.

(1)Where in a financial year two or more groups of companies are—

(a)controlled by the same person (see section 51F), and

(b)related to one another (see section 51G),

this section applies in relation to the companies which are members of those groups.

(2)The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3)The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4)The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

(5)In this section and in sections 51F and 51G, a group of companies means—

(a)a company which, in the financial year mentioned in subsection (1), is a parent undertaking of one or more other companies, and

(b)those other companies,

(and the members of the group are the company which is the parent undertaking and those other companies).

(6)A company (“P”) is a parent undertaking of another company (“C”) in a financial year if P is a parent undertaking of C at the end of C's chargeable period ending in that financial year.

(7)In this section “parent undertaking” has the same meaning as in section 1162 of the Companies Act 2006.

51EFourth restriction: other companies under common controlU.K.

(1)This section applies in relation to two or more companies which in a financial year are—

(a)controlled by the same person (see section 51F), and

(b)related to one another (see section 51G),

and in relation to which to neither section 51C nor section 51D applies.

(2)The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3)The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4)The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

51FCompanies and groups: meaning of “control”U.K.

(1)A company is controlled by a person in a financial year if it is controlled by that person at the end of its chargeable period ending in that financial year.

(2)A group of companies is controlled by a person in a financial year if the company which is the parent undertaking is controlled by that person at the end of its chargeable period ending in that financial year.

(3)Section 574(2) defines “control” in relation to a company which is a body corporate.

(4)In relation to a company (“C”) which is not a body corporate, control means the power of a person (“P”) to secure—

(a)by means of the holding of shares or the possession of voting power in relation to C or another body, or

(b)as a result of any powers conferred by the constitution of C or another body,

that the affairs of C are conducted in accordance with P's wishes.

(5)In subsection (4) “shares” has the meaning given by section 1161(2) of the Companies Act 2006.

51GCompanies and groups: meaning of “related”U.K.

(1)A company (“C1”) is related to another company (“C2”) in a financial year if one or both of—

(a)the shared premises condition, and

(b)the similar activities condition,

are met in relation to the companies in that financial year.

(2)Where C1 is related to C2 in a financial year, C1 is also related to any other company to which C2 is related in that financial year.

(3)A group of companies (“G1”) is related to another group of companies (“G2”) in a financial year if in that financial year a company which is a member of G1 is related to a company which is a member of G2.

(4)Where G1 is related to G2 in a financial year, G1 is also related to any other group of companies to which G2 is related in that financial year.

(5)The shared premises condition is met in relation to two companies in a financial year if, at the end of the relevant chargeable period of one or both of the companies, the companies carry on qualifying activities from the same premises.

(6)The similar activities condition is met in relation to two companies in a financial year if—

(a)more than 50% of the turnover of one company for the relevant chargeable period is derived from qualifying activities within a particular NACE classification, and

(b)more than 50% of the turnover of the other company for the relevant chargeable period is derived from qualifying activities within that NACE classification.

(7)In this section—

  • NACE classification” means the first level of the common statistical classification of economic activities in the European Union established by Regulation (EC) No 1893/2006 of the European Parliament and the Council of 20 December 2006 (as that Regulation has effect [F267in EU law]), and

  • relevant chargeable period”, in relation to a company and a financial year, means the chargeable period of the company ending in that financial year.

51HFifth restriction: qualifying activities under common controlU.K.

(1)This section applies in relation to two or more qualifying activities which, in a tax year—

(a)are carried on by a qualifying person other than a company,

(b)are controlled by the same person (see section 51I), and

(c)are related to one another (see section 51J).

(2)A qualifying activity is carried on by a qualifying person in a tax year if it is carried on by the person at the end of the chargeable period for the activity ending in the tax year.

(3)Where all the qualifying activities are carried on by one qualifying person, that person is entitled to a single annual investment allowance in respect of the relevant AIA qualifying expenditure.

(4)Where the qualifying activities are carried on by more than one qualifying person, those persons are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(5)The person or persons carrying on the qualifying activities may allocate the annual investment allowance to the relevant AIA qualifying expenditure as the person or persons think fit.

(6)The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred for the purposes of the qualifying activities in the chargeable periods for those activities ending in the tax year mentioned in subsection (1).

51IQualifying activities: meaning of controlU.K.

(1)A qualifying activity is controlled by a person in a tax year if it is controlled by the person at the end of the chargeable period for that activity which ends in that tax year.

(2)A qualifying activity carried on by an individual is controlled by the individual who carries it on.

(3)A qualifying activity carried on by a partnership is controlled by the person (if any) who controls the partnership.

(4)Section 574(3) defines “control” in relation to a partnership.

(5)Where partners who between them control one partnership also between them control another partnership, the qualifying activities carried on by the partnerships are to be treated as controlled by the same person.

51JQualifying activity: meaning of “related”U.K.

(1)A qualifying activity (“A1”) is related to another qualifying activity (“A2”) in a tax year if one or both of—

(a)the shared premises condition, and

(b)the similar activities condition,

are met in relation to the activities in the tax year.

(2)Where A1 is related to A2 in a tax year, A1 is also related to any other qualifying activity to which A2 is related in that tax year.

(3)The shared premises condition is met in relation to two qualifying activities in a tax year if, at the end of the relevant chargeable period for one or both of the activities, the activities are carried on from the same premises.

(4)The similar activities condition is met in relation to two qualifying activities in a tax year if, at the end of the relevant chargeable period for one or both of the activities, the activities are within the same NACE classification.

(5)In this section—

  • NACE classification” has the same meaning as in section 51G, and

  • relevant chargeable period”, in relation to a qualifying activity and a tax year, means the chargeable period for that activity ending in that tax year.

[F26851JASixth restriction: allocation where profits chargeable at NI rateU.K.

(1)This section applies if—

(a)section 51B, 51C, 51D or 51E applies, and

(b)the relevant AIA qualifying expenditure for the purposes of the section in question includes expenditure incurred in a low-rate year in respect of an NI rate activity.

(2)For the purposes of this section expenditure is “incurred in a low-rate year” if it is incurred in a financial year for which the Northern Ireland rate is lower than the main rate.

(3)The maximum annual investment allowance that may be allocated under section 51B, 51C, 51D or 51E to AIA qualifying expenditure incurred in a low-rate year in respect of qualifying activities other than NI rate activities is determined by the formula—

where—

A is the amount of the single annual investment allowance that would otherwise be available for allocation;

T is so much of the relevant AIA qualifying expenditure for the purposes of the section in question as is incurred in a low-rate year;

NI is so much of the relevant AIA qualifying expenditure for the purposes of the section in question as is expenditure incurred in a low-rate year in respect of an NI rate activity.]

Textual Amendments

F268S. 51JA inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 5

51KOperation of annual investment allowance where restrictions applyU.K.

(1)This section applies where because of section 51B, 51C, 51D, 51E or 51H a person is (or persons between them are) entitled to a single annual investment allowance in respect of relevant AIA qualifying expenditure.

(2)If the relevant AIA qualifying expenditure is less than or equal to the maximum allowance, the person is (or the persons between them are) entitled to an annual investment allowance in respect of all the relevant AIA qualifying expenditure.

(3)If the relevant AIA qualifying expenditure is more than the maximum allowance, the person is (or the persons between them are) entitled to an annual investment allowance in respect of so much of the relevant AIA qualifying expenditure as does not exceed the maximum allowance.

(4)The maximum allowance is the amount for the time being specified in section 51A(5); but this is subject to sections 51M and 51N (which provide that in certain cases an additional amount of annual investment allowance may be available).

(5)The person or persons may claim an annual investment allowance in respect of all the relevant AIA qualifying expenditure in respect of which the person is (or the persons between them are) entitled to an allowance, or in respect of only some of it.

(6)The amount of the annual investment allowance allocated to relevant AIA qualifying expenditure incurred in a chargeable period must not exceed the amount of the annual investment allowance to which a person would be entitled in respect of that expenditure under section 51A(5) and (6) if section 51B, 51C, 51D, 51E or 51H did not apply.

51LSpecial provision for short chargeable periodsU.K.

(1)This section applies where—

(a)more than one chargeable period of a company ends in a financial year, or

(b)more than one chargeable period for a qualifying activity ends in a tax year.

(2)Whether section 51C, 51D or 51E applies in relation to the company, or section 51H applies in relation to the qualifying activity, is to be determined in relation to each chargeable period ending in that year as if it were the only chargeable period ending in that year.

(3)AIA qualifying expenditure incurred in a chargeable period in relation to which the section in question does not apply is not relevant AIA qualifying expenditure for the purposes of that section.

51MSpecial provision for long chargeable periodsU.K.

(1)This section applies where—

(a)section 51H applies in relation to two or more qualifying activities controlled by a person (“P”) in a tax year, and

(b)the relevant chargeable period for one of those qualifying activities (“A1”) is longer than a year.

(2)An additional amount of annual investment allowance may be allocated to relevant AIA qualifying expenditure incurred for the purposes of A1.

(3)That additional amount is the amount, or the aggregate of the amounts, of any relevant unused allowance for each tax year (a “previous tax year”)—

(a)which falls before the tax year mentioned in subsection (1)(a), and

(b)in which part of A1's relevant chargeable period falls.

(4)The amount of the relevant unused allowance for a previous tax year is (subject to subsections (7) and(8))—

but where the amount given by that formula is less than nil, the amount of the relevant unused allowance for the previous tax year is nil.

(5)In subsection (4)—

  • MA is the amount specified in section 51A(5) in relation to the previous tax year, and

  • AM is the amount of any annual investment allowance made under section 51A or 51K in respect of AIA qualifying expenditure incurred for the purposes of a relevant qualifying activity in the chargeable period for that activity ending in the previous tax year.

(6)Relevant qualifying activity” means—

(a)any qualifying activity carried on by a qualifying person other than a company which was controlled by P in the previous tax year (see section 51I) and related to A1 in that tax year (see section 51J), and

(b)if A1 was controlled by P in the previous tax year (see section 51I), A1.

(7)Where any part of the amount calculated under subsection (4) has, on a previous application of this section, been allocated to AIA qualifying expenditure incurred for the purposes of a qualifying activity controlled by P in a tax year before that mentioned in subsection (1)(a), the amount of the relevant unused allowance is reduced accordingly.

(8)Where the amount of the relevant unused allowance for a previous tax year would (apart from this subsection) exceed—

the amount of the relevant unused allowance for that tax year is limited to the amount given by that formula.

(9)In subsection (8)—

  • DCPY is the number of days in A1's relevant chargeable period falling in the previous tax year,

  • DY is the number of days in that tax year, and

  • MA has the meaning given by subsection (5).

(10)Nothing in this section prevents section 51K(6) applying in relation to relevant AIA qualifying expenditure incurred for the purposes of A1.

(11)In this section references to a relevant chargeable period, in relation to a qualifying activity, are to the chargeable period for that activity ending in the tax year mentioned in subsection (1)(a).

51NSpecial provision for long chargeable periods: supplementaryU.K.

(1)This section applies where—

(a)section 51H applies in relation to two or more qualifying activities controlled by a person (“P”) in a tax year, and

(b)the relevant chargeable period for more than one of those qualifying activities is longer than a year.

(2)Section 51M applies in relation to each of the qualifying activities mentioned in subsection (1)(b) and the tax year mentioned in subsection (1)(a), as it applies in relation to A1 and the tax year mentioned in subsection (1)(a) of that section.

(3)But where two or more of the qualifying activities mentioned in subsection (1)(b) were related in a previous tax year, section 51M applies with the following modifications.

(4)The amount of any relevant unused allowance for that tax year is to be calculated under section 51M(4) to (7) (without regard to section 51M(8)).

(5)For that purpose section 51M(6) applies as if the references to A1 were references to any of the qualifying activities mentioned in subsection (1)(b).

(6)The amount of the relevant unused allowance may be allocated between those activities, but this is subject to subsection (7).

(7)The amount of the relevant unused allowance allocated to any one of those activities may not exceed the amount given by the formula in section 51M(8).]

First-year allowancesU.K.

52 First-year allowancesU.K.

(1)A person is entitled to a first-year allowance in respect of first-year qualifying expenditure if—

(a)the expenditure is incurred in a chargeable period to which this Act applies, and

(b)the person owns the plant or machinery at some time during that chargeable period.

(2)Any first-year allowance is made for the chargeable period in which the first-year qualifying expenditure is incurred.

(3)The amount of the allowance is a percentage of the first-year qualifying expenditure in respect of which the allowance is made, as shown in the Table—

Table

Amount of first-year allowances

Type of first-year qualifying expenditureAmount
F269. . .F269. . .
F270. . .F270. . .
F269. . .F269. . .
F271. . .F271. . .
[F272Expenditure qualifying under section 45D (expenditure on cars with low CO2 emissions)100%]
[F273Expenditure qualifying under section 45DA (expenditure on zero-emission goods vehicles) 100%]
[F274Expenditure qualifying under section 45E (expenditure on plant or machinery for gas refuelling station)100%]
[F275Expenditure qualifying under section 45EA (expenditure on plant or machinery for electric vehicle charging point) 100%]
[F276Expenditure qualifying under section 45F (expenditure for use wholly in a ring fence trade) 100%]
F277. . .F277. . .
[F278Expenditure qualifying under section 45K (expenditure on plant and machinery for use in designated assisted areas) 100%]
[F279Expenditure qualifying under section 45O (expenditure on plant and machinery for use in [F280special tax sites]) 100%]
[F281Expenditure qualifying under section 45S (expenditure on plant or machinery in other cases) which is not special rate expenditure 100%]
[F281Expenditure qualifying under section 45S (expenditure on plant or machinery in other cases) which is special rate expenditure 50%]

F282...

[F283(3A)Subsection (3B) applies where the Treasury make regulations under section 45EA(4) (power to extend relevant period).

(3B)The regulations may amend the amount specified in column 2 of the Table in subsection (3) for expenditure qualifying under section 45EA, but only in relation to expenditure incurred after the date on which the relevant period would have ended but for the regulations.]

(4)A person who is entitled to a first-year allowance may claim the allowance in respect of the whole or a part of the first-year qualifying expenditure.

(5)Subsection (1) needs to be read with section 236 (first-year allowances in respect of additional VAT liabilities) and is subject to—

  • [F284section 70DA(2) (transfer and long funding leaseback: no first-year allowance for lessee),]

  • section 205 (reduction of first-year allowance if plant or machinery provided partly for purposes other than those of qualifying activity),

  • section 210 (reduction of first-year allowance if it appears that a partial depreciation subsidy is or will be payable), F285...

  • [F286section 212T (cap on first-year allowances: zero-emission goods vehicles), F287...]

  • [F288 section 212U (cap on first-year allowances: expenditure on plant and machinery for use in designated assisted areas), and ]

  • sections 217[F289, 229A(2) ] F290... and 241 (anti-avoidance: no first-year allowance in certain cases).

Textual Amendments

F269S. 52(3) entries omitted (21.7.2008) by virtue of Finance Act 2008 (c. 9), s. 76(5)(d) (with s. 76(7)(8))

F270S. 52(3) entry omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(d)(i)

F271Words in s. 52(3) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(v)(a)

F272S. 52(3): words in Table added (with effect as mentioned in s. 59 of the amending Act) by Finance Act 2002 (c. 23), s. 59, Sch. 19 para. 5

F273Words in s. 52(3) Table inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 5(2)

F274S. 52(3): words in Table added (with effect as mentioned in s. 61 of the amending Act) by Finance Act 2002 (c. 23), s. 61, Sch. 20 para. 5

F275Words in s. 52(3) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 38(5)(a)

F276Words in s. 52(3) substituted (with effect in accordance with s. 108(2) of the amending Act) by Finance Act 2008 (c. 9), s. 108(1)

F277Words in s. 52(3) omitted (with effect in accordance with s. 33(5) of the amending Act) by virtue of Finance Act 2019 (c. 1), s. 33(2)(b)(v)(b)

F278Words in s. 52(3) inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 5(2)

F279Words in s. 52(3) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 5

F281Words in s. 52(3) Table inserted (22.2.2024) by Finance (No. 2) Act 2023 (c. 30), s. 7(5) (as amended by Finance Act 2024 (c. 3), s. 1(2)(a))

F282Words in s. 52(3) omitted (with effect in accordance with s. 75(5)-(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), s. 75(3)(d)(ii)

F283S. 52(3A)(3B) inserted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), s. 38(5)(b)

F284Words in s. 52(5) inserted (with effect in accordance with Sch. 32 para. 17 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 13

F285Word in s. 52(5) omitted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 5(3)(a)

F286Words in s. 52(5) inserted (with effect in accordance with Sch. 7 para. 7 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 7 para. 5(3)(b)

F287Word in s. 52(5) omitted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by virtue of Finance Act 2012 (c. 14), Sch. 11 para. 5(3)(a)

F288S. 52(5) entry inserted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 5(3)(b)

F289Word in s. 52(5) inserted (with effect in accordance with Sch. 32 para. 22 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 19

F290Words in s. 52(5) omitted (with effect in accordance with Sch. 20 para. 6(19) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 20 para. 6(3)

Modifications etc. (not altering text)

C58S. 52(3) modified (temp.) (with effect in accordance with s. 30(2) of the amending Act) by Finance Act 2006 (c. 25), s. 30(1)

[F291Prevention of double relief]U.K.

Textual Amendments

F291S. 52A and cross-heading inserted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 4

52APrevention of double reliefU.K.

A person may not [F292claim— ]

[F292(a)an annual investment allowance and a first-year allowance in respect of the same expenditure, or

(b)first-year allowances under two or more of the provisions listed in section 39 in respect of the same expenditure.]

Textual Amendments

F292Words in s. 52A substituted (with effect in accordance with Sch. 11 para. 8 of the amending Act) by Finance Act 2012 (c. 14), Sch. 11 para. 6

PoolingU.K.

53 Pooling of qualifying expenditureU.K.

(1)Qualifying expenditure has to be pooled for the purpose of determining a person’s entitlement to writing-down allowances and balancing allowances and liability to balancing charges.

(2)If a person carries on more than one qualifying activity, expenditure relating to the different activities must not be allocated to the same pool.

54 The different kinds of poolsU.K.

(1)There are single asset pools, class pools and the main pool.

(2)A single asset pool may not contain expenditure relating to more than one asset.

(3)The following provide for qualifying expenditure to be allocated to a single asset pool—

  • F293. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ;

  • section 86 (short-life asset);

  • section 127 (ship);

  • section 206 (plant or machinery provided or used partly for purposes other than those of qualifying activity);

  • section 211 (payment of partial depreciation subsidy);

  • section 538 (contribution allowances: plant and machinery).

(4)A class pool is a pool which may contain expenditure relating to more than one asset.

(5)The following provide for qualifying expenditure to be allocated to a class pool—

  • [F294section 104C (special rate expenditure); ]

  • section 107 (overseas leasing).

(6)Qualifying expenditure may be allocated to the main pool only if it does not fall to be allocated to a single asset pool or a class pool.

Textual Amendments

F293Words in s. 54(3) omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1), 29(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 15 (with Sch. 11 paras. 30-32)

F294Words in s. 54(5) substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 3

Writing-down and balancing allowances and balancing chargesU.K.

55 Determination of entitlement or liabilityU.K.

(1)Whether a person is entitled to a writing-down allowance or a balancing allowance, or liable to a balancing charge, for a chargeable period is determined separately for each pool of qualifying expenditure and depends on—

(a)the available qualifying expenditure in that pool for that period (“AQE”), and

(b)the total of any disposal receipts to be brought into account in that pool for that period (“TDR”).

(2)If AQE exceeds TDR, the person is entitled to a writing-down allowance or a balancing allowance for the period.

(3)If TDR exceeds AQE, the person is liable to a balancing charge for the period.

(4)The entitlement under subsection (2) is to a writing-down allowance except for the final chargeable period when it is to a balancing allowance.

(5)The final chargeable period is given by section 65.

(6)Subsection (2) is subject to [F295section 104F (special rate cars: discontinued activity continued by relevant company) and] section 110(1) (overseas leasing: allowances prohibited in certain cases).

Textual Amendments

F295Words in s. 55(6) inserted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 16 (with Sch. 11 paras. 30-32)

56 Amount of allowances and chargesU.K.

(1)The amount of the writing-down allowance to which a person is entitled for a chargeable period is [F29618%] of the amount by which AQE exceeds TDR.

[F297(1A)But in relation to qualifying expenditure incurred wholly for the purposes of a ring fence trade in respect of which tax is chargeable under [F298section 330(1) of CTA 2010] (supplementary charge in respect of ring fence trades), the amount of the writing-down allowance to which a person is entitled for a chargeable period is 25% of the amount by which AQE exceeds TDR.]

(2)[F299Subsections (1) and (1A) are] subject to—

[F300(za)section 56A (small main pools and special rate pools),]

[F301(a)section 104D (special rate expenditure: [F302[F3036%] or] 10%), and]

(b)section 109 (overseas leasing: 10%).

(3)If the chargeable period is more or less than a year, the amount is proportionately increased or reduced.

(4)If the qualifying activity has been carried on for part only of the chargeable period, the amount is proportionately reduced.

(5)A person claiming a writing-down allowance may require the allowance to be reduced to a specified amount.

(6)The amount of the balancing charge to which a person is liable for a chargeable period is the amount by which TDR exceeds AQE.

(7)The amount of the balancing allowance to which a person is entitled for the final chargeable period is the amount by which AQE exceeds TDR.

Textual Amendments

F296Word in s. 56(1) substituted (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(2)

F297S. 56(1A) inserted (with effect in accordance with s. 80(8)-(12) of the amending Act) by Finance Act 2008 (c. 9), s. 80(3)

F298Words in s. 56(1A) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 326 (with Sch. 2)

F299Words in s. 56(2) substituted (with effect in accordance with s. 80(8) of the amending Act) by Finance Act 2008 (c. 9), s. 80(4)

F300S. 56(2)(za) inserted (with effect in accordance with s. 81(5) of the amending Act) by Finance Act 2008 (c. 9), s. 81(2)

F301S. 56(2)(a) substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 4

F302Words in s. 56(2)(a) inserted (with effect in accordance with s. 10(8)-(13) of the amending Act) by Finance Act 2011 (c. 11), s. 10(4)(b)

F303Word in s. 56(2)(a) substituted (with effect in accordance with s. 31(4)(8) of the amending Act) by Finance Act 2019 (c. 1), s. 31(3)(a)

[F30456AWriting-down allowances for small poolsU.K.

(1)This section applies in relation to the main pool and the special rate pool.

(2)Where the amount by which AQE exceeds TDR is less than or equal to the small pool limit, the amount of the writing-down allowance to which a person is entitled for a chargeable period is the amount by which AQE exceeds TDR.

(3)The small pool limit is £1,000, except that—

(a)if the chargeable period is more or less than a year, it is proportionately increased or reduced, and

(b)if the qualifying activity has been carried on for part only of the chargeable period, it is proportionately reduced.

(4)A person claiming a writing-down allowance under this section may require the allowance to be reduced to a specified amount.

(5)The Treasury may by order substitute for the amount for the time being specified in subsection (3) such other amount as it thinks fit.

(6)An order under subsection (5) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.]

Textual Amendments

F304S. 56A inserted (with effect in accordance with s. 81(5) of the amending Act) by Finance Act 2008 (c. 9), s. 81(3)

Available qualifying expenditureU.K.

57 Available qualifying expenditureU.K.

(1)The general rule is that a person’s available qualifying expenditure in a pool for a chargeable period consists of—

(a)any qualifying expenditure allocated to the pool for that period in accordance with section 58, and

(b)any unrelieved qualifying expenditure carried forward in the pool from the previous chargeable period under section 59.

(2)A person’s available qualifying expenditure in a pool for a chargeable period also includes any amount allocated to the pool for that period under—

  • section 26(3) (net costs of demolition);

  • section 86(2) or 87(2) (allocation of expenditure in short-life asset pool);

  • section 111(3) (overseas leasing: standard recovery mechanism);

  • section 129(1), 132(2), 133(3) or 137 (provisions relating to operation of single ship pool and deferment of balancing charges in respect of ships);

  • [F305section 161C(2)(decommissioning expenditure incurred by person carrying on trade of oil extraction);]

  • section 165(3) ([F306general decommissioning expenditure] incurred after cessation of ring fence trade);

  • section 206(3) (plant or machinery used partly for purposes other than those of the qualifying activity);

  • section 211(4) (partial depreciation subsidy paid).

(3)A person’s available qualifying expenditure does not include any expenditure excluded by—

  • section 8(4) or 9(1) (rules against double relief);

  • [F307section 70DA (transfer and long funding leaseback);]

  • [F308sections 165A to 165E (restrictions on allowances: anti-avoidance);]

  • section 166(2) (transfers of interests in oil fields: anti-avoidance);

  • section 185(2), 186(2)[F309, 186A(2)] or 187(2) (restrictions where other claims made in respect of fixture);

  • section 218(1), [F310218ZA(1) or (3),] F311... 228(2)[F312, 229A], 242(2), or 243(2) (general anti-avoidance provisions).

(4)Subsection (1) is also subject to section 220 (allocation to chargeable periods of expenditure incurred on plant or machinery for leasing under finance lease).

Textual Amendments

F305Words in s. 57(2) inserted (with effect as mentioned in Sch. 20 para. 9(1)-(4)(8) of the amending Act) by Finance Act 2001 (c. 9), s. 68, Sch. 20 para. 5(2)

F306Words in s. 57(2) substituted (with effect in accordance with s. 109(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 34 para. 4

F307Words in s. 57(3) inserted (with effect in accordance with Sch. 32 para. 17 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 14

F308Words in s. 57(3) inserted (with effect in accordance with Sch. 32 para. 8 of the amending Act) by Finance Act 2013 (c. 29), Sch. 32 para. 4

F309Words in s. 57(3) inserted (with effect in accordance with Sch. 10 para. 12 of the amending Act) by Finance Act 2012 (c. 14), Sch. 10 para. 8

F310Words in s. 57(3) inserted (with effect in accordance with Sch. 9 para. 9(1)(3) of the amending Act) by Finance Act 2012 (c. 14), Sch. 9 para. 2

F311Word in s. 57(3) omitted (with effect in accordance with Sch. 20 para. 6(19) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 20 para. 6(4)

F312Words in s. 57(3) inserted (with effect in accordance with Sch. 32 para. 22 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 20

58 Initial allocation of qualifying expenditure to poolsU.K.

(1)The following rules apply to the allocation of a person’s qualifying expenditure to the appropriate pool.

(2)An amount of qualifying expenditure is not to be allocated to a pool for a chargeable period if that amount has been taken into account in determining the person’s available qualifying expenditure for an earlier chargeable period.

(3)Qualifying expenditure is not to be allocated to a pool for a chargeable period before that in which the expenditure is incurred.

(4)Qualifying expenditure is not to be allocated to a pool for a chargeable period unless the person owns the plant or machinery at some time in that period.

[F313(4A)If an annual investment allowance is made to a person for a chargeable period—

(a)the AIA qualifying expenditure in respect of which the allowance is made must be allocated to the appropriate pool (or pools) in that chargeable period, and

(b)the available qualifying expenditure in a pool to which the expenditure (or some of it) is allocated is reduced by the amount of that expenditure.]

(5)If a first-year allowance is made in respect of an amount of first-year qualifying expenditure—

(a)subject to subsection (6), none of that amount is to be allocated to a pool for the chargeable period in which the expenditure is incurred, and

(b)the amount that may be allocated to a pool for any chargeable period is limited to the balance left after deducting the first-year allowance.

(6)If—

(a)a first-year allowance is made in respect of an amount of first-year qualifying expenditure,

(b)a disposal event occurs in respect of the plant or machinery in any chargeable period, and

(c)none of the balance left after deducting the first-year allowance has been allocated to a pool for an earlier chargeable period,

the balance (or some of it) must be allocated to a pool for the chargeable period in which the disposal event occurs.

(7)Subsection (6) applies even if the balance is nil (because of a 100% first-year allowance).

(8)The appropriate pool” means whichever pool is applicable under the provisions of this Part apart from this section.

Textual Amendments

F313S. 58(4A) inserted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 5

59 Unrelieved qualifying expenditureU.K.

(1)A person has unrelieved qualifying expenditure to carry forward from a chargeable period if for that period—

[F314(a)]AQE exceeds TDR[F315, and

( b)where section 56A(2) applies, the person does not claim a writing-down allowance of the amount by which AQE exceeds TDR.]

(2)The amount of the unrelieved qualifying expenditure is—

(a)the excess less the writing-down allowance made for the period, or

(b)if no writing-down allowance is claimed for the period, the excess.

(3)No amount may be carried forward as unrelieved qualifying expenditure from the final chargeable period.

[F316(4)If a person carrying on a trade, profession or vocation enters the cash basis for a tax year, [F317any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in a pool for the trade, profession or vocation] from the chargeable period ending [F318in the previous tax year (or, if there is more than one such period, the latest of them)].

[F319(4A)If a person carrying on a property business enters the cash basis for a tax year, any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in a pool for a relevant qualifying activity from the chargeable period which is the previous tax year.]

F320(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F321(5A)A “cash basis deductible amount” means any amount of unrelieved qualifying expenditure for which a deduction would be allowed in calculating the profits of the trade, profession, vocation or property business (as the case may be) on the cash basis on the assumption that the expenditure was paid in the tax year for which the person enters the cash basis.]

(6)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated to a single asset pool, [F322any cash basis deductible amount] is to be determined on such basis as is just and reasonable in all the circumstances.

[F323(7)Subsections (9), (10) and (11) of section 1A (capital allowances and charges: cash basis) apply for the purposes of this section as they apply for the purposes of that section.]

(7A)In subsection (4A) “relevant qualifying activity” means—

(a)in relation to a UK property business, an ordinary UK property business and a UK furnished holiday lettings business, and

(b)in relation to an overseas property business, an ordinary overseas property business and an EEA furnished holiday lettings business.]

[F324(8)Subsection (9) applies if—

(a)a person carrying on a trade, profession or vocation incurs expenditure in relation to a vehicle,

(b)at the end of F325... a tax year, the person has unrelieved qualifying expenditure incurred in relation to the vehicle to carry forward from the chargeable period ending [F326in that tax year (or, if there is more than one such period, the latest of them)] (“the relevant chargeable period”), [F327and]

(c)in calculating the profits of a trade, profession or vocation of a person for the following tax year, a deduction is made under section 94D of ITTOIA 2005 in respect of expenditure incurred in relation to the vehicle, F328...

F328(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)None of the unrelieved qualifying expenditure incurred in relation to the vehicle may be carried forward as unrelieved qualifying expenditure from the relevant chargeable period.

[F329(9A)Subsection (9B) applies if—

(a)a person carrying on a property business incurs expenditure in relation to a vehicle,

(b)at the end of a tax year, the person has unrelieved qualifying expenditure incurred in relation to the vehicle to carry forward from the chargeable period ending with that tax year (“the relevant chargeable period”), and

(c)in calculating the profits of a property business of a person for the following tax year, a deduction is made under section 94D of ITTOIA 2005 (as applied by section 271E of that Act) in respect of expenditure incurred in relation to the vehicle.

(9B)None of the unrelieved qualifying expenditure incurred in relation to the vehicle may be carried forward as unrelieved qualifying expenditure from the relevant chargeable period.]

(10)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated to a single asset pool, the amount of the unrelieved qualifying expenditure incurred in relation to the vehicle is to be determined on such basis as is just and reasonable in all the circumstances.]

Textual Amendments

F314Word in s. 59(1) inserted (with effect in accordance with s. 81(5) of the amending Act) by Finance Act 2008 (c. 9), s. 81(4)(a)

F315Words in s. 59(1) inserted (with effect in accordance with s. 81(5) of the amending Act) by Finance Act 2008 (c. 9), s. 81(4)(b)

F316S. 59(4)-(7) inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 47

F317Words in s. 59(4) substituted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(2)

F318Words in s. 59(4) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2022 (c. 3), Sch. 1 paras. 34(2), 61(1)

F319S. 59(4A) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(3)

F320S. 59(5) omitted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by virtue of Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(4)

F321S. 59(5A) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(5)

F322Words in s. 59(6) substituted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(6)

F323S. 59(7)(7A) substituted for s. 59(7) (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 52(7)

F324S. 59(8)-(10) inserted (with effect in accordance with Sch. 5 para. 6 of the amending Act) by Finance Act 2013 (c. 29), Sch. 5 para. 5(3)

F325Words in s. 59(8)(b) omitted (for the tax year 2024-25 and subsequent tax years) by virtue of Finance Act 2022 (c. 3), Sch. 1 paras. 34(3)(a), 61(1)

F326Words in s. 59(8)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2022 (c. 3), Sch. 1 paras. 34(3)(b), 61(1)

F327Word in s. 59(8)(b) inserted (with effect in accordance with s. 36(7) of the amending Act) by Finance Act 2018 (c. 3), s. 36(6)(a)(i)

F328S. 59(8)(d) and preceding word omitted (with effect in accordance with s. 36(7) of the amending Act) by virtue of Finance Act 2018 (c. 3), s. 36(6)(a)(ii)

F329S. 59(9A)(9B) inserted (with effect in accordance with s. 36(8) of the amending Act) by Finance Act 2018 (c. 3), s. 36(6)(b)

Modifications etc. (not altering text)

C59S. 59(1)(2) applied by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 240C(6) (as inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 38)

C60S. 59(4) excluded by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 240C(5A) (as inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 7(7))

[F330Special balancing charge in cases of full expensing etcU.K.

Textual Amendments

F330Ss. 59A-59C and cross-heading inserted (22.2.2024) by Finance (No. 2) Act 2023 (c. 30), s. 7(6) (as amended by Finance Act 2024 (c. 3), s. 1(2))

59ADisposal of assets where first-year allowance made under section 45S for expenditure which is not special rate expenditureU.K.

(1)This section applies if a first-year allowance has been made to a company in respect of first-year qualifying expenditure under section 45S which is not special rate expenditure.

(2)If the company is required to bring a disposal value into account for an accounting period by reference to the plant or machinery on which the expenditure is incurred, the company is liable to a balancing charge for that period (whether or not it is also liable to any other balancing charge for that period).

(3)The amount of the balancing charge is the relevant proportion of the disposal value; and the relevant proportion is determined by dividing—

(a)the amount of the expenditure that was the subject of the allowance, by

(b)the total amount of expenditure that has been the subject of that or any other first-year allowance or has been allocated to a pool for that or any other accounting period.

(4)In relation to the accounting period for which the disposal value is brought into account, TDR (see section 55(1)(b)) for the pool to which the expenditure that was the subject of the allowance was allocated is to be reduced by the amount of the balancing charge.

59BDisposal of assets where first-year allowance made under section 45S for expenditure which is special rate expenditureU.K.

(1)This section applies if a first-year allowance has been made to a company in respect of first-year qualifying expenditure under section 45S which is special rate expenditure.

(2)If the company is required to bring a disposal value into account for an accounting period by reference to the plant or machinery on which the expenditure is incurred, the company is liable to a balancing charge for that period (whether or not it is also liable to any other balancing charge for that period).

(3)The amount of the balancing charge is the relevant proportion of the disposal value; and the relevant proportion is determined by—

(a)dividing the amount of the expenditure that was the subject of the allowance by two, and

(b)dividing the result of that division by the total amount of expenditure that has been the subject of that or any other first-year allowance or has been allocated to a pool for that or any other accounting period.

(4)In relation to the accounting period for which the disposal value is brought into account, TDR (see section 55(1)(b)) for the pool to which the expenditure that was the subject of the allowance was allocated is to be reduced by the amount of the balancing charge.

59CSections 59A and 59B: tax avoidance arrangementsU.K.

(1)This section applies if arrangements are entered into the main purpose, or one of the main purposes, of which is—

(a)to secure that a balancing charge under section 59A or 59B is not chargeable on a company, or

(b)to secure a reduction in the amount, or a change in the timing, of a balancing charge under section 59A or 59B which is chargeable on a company.

(2)Sections 59A and 59B are to have effect as if the arrangements had not been entered into.

(3)In this section “arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).]

Disposal events and disposal values: generalU.K.

60 Meaning of “disposal receipt” and “disposal event”U.K.

(1)In this Part “disposal receipt” means a disposal value that a person is required to bring into account in accordance with—

(a)sections 61, 62 and 63 (disposal events, disposal values and the general limit on the amount of a disposal value),

(b)any of the provisions of this Part listed in section 66, or

(c)[F331section 614BS of ITA 2007] or [F332section 918 of CTA 2010 (cases where expenditure taken into account under Part 2, 5 or 8 of this Act) or] any other enactment,

when read with sections 64 and 264(3) (cases in which no disposal value need be brought into account).

(2)In this Part “disposal event” means any event of a kind that requires a disposal value to be brought into account under this Part (whether under section 61(1) or otherwise).

(3)If—

(a)qualifying expenditure has been allocated to a pool, and

(b)more than one disposal event occurs in respect of the plant or machinery,

a disposal value is required to be brought into account in the pool in connection with the first event only.

(4)In subsection (3) “disposal event” does not include a disposal event arising under—

  • section 72 (computer software),

  • sections 140 and 143 (attribution of deferred balancing charge), or

  • section 238(2) (additional VAT rebates).

Textual Amendments

F331Words in s. 60(1)(c) substituted (1.4.2010) (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 234 (with Sch. 9 paras. 1-9, 22)

F332Words in s. 60(1)(c) inserted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 327 (with Sch. 2)

61 Disposal events and disposal valuesU.K.

(1)A person who has incurred qualifying expenditure is required to bring the disposal value of the plant or machinery into account for the chargeable period in which—

(a)the person ceases to own the plant or machinery;

(b)the person loses possession of the plant or machinery in circumstances where it is reasonable to assume that the loss is permanent;

(c)the plant or machinery has been in use for mineral exploration and access and the person abandons it at the site where it was in use for that purpose;

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

(e)the plant or machinery begins to be used wholly or partly for purposes other than those of the qualifying activity;

[F333(ee)the plant or machinery begins to be leased under a long funding lease (see Chapter 6A);]

(f)the qualifying activity is permanently discontinued.

(2)The disposal value to be brought into account depends on the disposal event, as shown in the Table—

Table

Disposal values: general

1. Disposal event2. Disposal value
1. Sale of the plant or machinery, except in a case where item 2 [F334or 2A] applies.

The net proceeds of the sale, together with—

(a)

any insurance money received in respect of the plant or machinery as a result of an event affecting the price obtainable on the sale, and

(b)

any other compensation of any description so received, so far as it consists of capital sums.

2. Sale of the plant or machinery where—

(a)

the sale is at less than market value,

(b)

there is no charge to tax under [F335ITEPA 2003], and

(c)

the condition in subsection (4) is met by the buyer.

The market value of the plant or machinery at the time of the sale.

[F3362A. Sale of the plant or machinery where—

(a)

the sale is at less than market value,

(b)

the condition in subsection (4A) is met by the seller, and

(c)

the condition in subsection (4B) is met by the buyer.

The market value of the plant or machinery at the time of the sale.]
3. Demolition or destruction of the plant or machinery.

The net amount received for the remains of the plant or machinery, together with—

(a)

any insurance money received in respect of the demolition or destruction, and

(b)

any other compensation of any description so received, so far as it consists of capital sums.

4. Permanent loss of the plant or machinery otherwise than as a result of its demolition or destruction.Any insurance money received in respect of the loss and, so far as it consists of capital sums, any other compensation of any description so received.
5. Abandonment of the plant or machinery which has been in use for mineral exploration and access at the site where it was in use for that purpose.Any insurance money received in respect of the abandonment and, so far as it consists of capital sums, any other compensation of any description so received.
[F3375A. Commencement of the term of a long funding finance lease of the plant or machinery.

The greater of—

(a)

the market value of the plant or machinery at the commencement of the term of the lease, and

(b)

the qualifying lease payments.]

[F3385B. Commencement of the term of a long funding operating lease of the plant or machinery.An amount equal to the market value of the plant or machinery at the commencement of the term of the lease.]
6. Permanent discontinuance of the qualifying activity followed by the occurrence of an event within any of items 1 to [F3395B].The disposal value for the item in question.
[F3406A. Disposal event to which section 62A applies.The relevant transition value (see section 62A).]
7. Any event not falling within any of items 1 to [F3416A].The market value of the plant or machinery at the time of the event.

(3)The amounts referred to in column 2 of the Table are those received by the person required to bring the disposal value into account.

(4)The condition referred to in item 2 of the Table is met by the buyer if—

(a)the buyer’s expenditure on the acquisition of the plant or machinery cannot be qualifying expenditure under this Part or Part 6 (research and development allowances), or

(b)the buyer is a dual resident investing company which is connected with the seller.

[F342(4A)The condition referred to in paragraph (b) of item 2A in the Table is met by the seller if—

(a)the seller is—

(i)a company, or

(ii)a partnership whose partners include one or more companies, and

(b)before the sale the plant or machinery is used wholly or partly for the purposes of a qualifying activity that is not an NI rate activity.

(4B)The condition referred to in paragraph (c) of item 2A in the Table is met by the buyer if—

(a)the buyer is [F343an SME (Northern Ireland employer) company], a NIRE company or a Northern Ireland firm in the chargeable period of the buyer in which the plant or machinery is bought,

(b)the buyer's expenditure on the acquisition of the plant or machinery is qualifying expenditure under this Part or Part 6 (research and development allowances), and

(c)the plant or machinery is used by the buyer wholly or partly for the purposes of an NI rate activity.]

(5)In this section “mineral exploration and access” has the same meaning as in Chapter 13 (provisions affecting the mining and oil industries) and Part 5 (mineral extraction allowances).

[F344(5A)In item 5A of the Table “qualifying lease payments” means the minimum payments under the lease (including any initial payment), excluding the following—

(a)so much of any payment as, under generally accepted accounting practice, falls (or would fall) to be treated as the gross return on investment in respect of the lease,

(b)so much of any payment as represents charges for services, and

(c)so much of any payment as represents qualifying UK or foreign tax (within the meaning of section 70YE) to be paid by the lessor.]

F345(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F345(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F345(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F345(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F333S. 61(1)(ee) inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 5(2)

F334Words in s. 61(2) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 6(2)(a)

F335Words in s. 61(2) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), s. 723, Sch. 6 para. 249 (with Sch. 7)

F336Words in s. 61(2) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 6(2)(b)

F337Words in s. 61(2) substituted (with effect in accordance with Sch. 32 para. 5(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 1(2)

F338Words in s. 61(2) Table inserted (with effect in accordance with Sch. 8 para. 15 to the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 5(3)

F339Word in s. 61(2) substituted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 5(4)

F340S. 61 Table Item 6A inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 16, 31

F341Word in s. 61 Table Item 7 substituted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 16, 31

F342S. 61(4A)(4B) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 6(3)

F343Words in s. 61(4B)(a) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(d)

F344S. 61(5A) inserted (with effect in accordance with Sch. 32 para. 5(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 1(3)

F345S. 61(6)-(9) omitted (with effect in accordance with Sch. 32 para. 5(1) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 32 para. 1(4)

Modifications etc. (not altering text)

C61 S. 61 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 para. 9(4) (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1

C63S. 61 modified (E.W.S.) (24.7.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 22; S.I. 2005/1909, art. 2, Sch.

C64S. 61(2)-(4) excluded (E.W.S.) (8.6.2005) by Railways Act 2005 (c. 14), s. 60(2), Sch. 10 para. 14(2)(a); S.I. 2005/1444, art. 2(1), Sch. 1

62 General limit on amount of disposal valueU.K.

(1)The amount of any disposal value required to be brought into account by a person in respect of any plant or machinery is limited to the qualifying expenditure incurred by the person on its provision.

(2)Subsection (3) applies if a person who is required to bring a disposal value into account has acquired the plant or machinery as a result of a transaction which was, or a series of transactions each of which was, between connected persons.

(3)The amount of the disposal value is limited to the amount of the qualifying expenditure on the provision of the plant or machinery incurred by whichever party to the transaction, or to any of the transactions, incurred the greatest such expenditure.

(4)This section is subject to section 239 (limit on disposal value where additional VAT rebate or rebates has or have been made in respect of original expenditure).

[F34662ACases in which disposal value is transition valueU.K.

(1)Subject as follows, this section applies where an election under section 18A of CTA 2009 has effect in relation to a company and the operation of section 15(2A) brings about a disposal event consisting of plant or machinery beginning to be used for purposes other than those of a qualifying activity.

(2)Where this section applies to a disposal event, the disposal value is the transition value.

(3)The transition value is such amount as gives rise to neither a balancing allowance nor a balancing charge.

(4)This section does not apply if—

(a)the qualifying expenditure in respect of the plant or machinery, or of the group of assets of which it forms part at any time during a relevant accounting period, exceeds £5 million, and

(b)the company has used the plant or machinery otherwise than for the purposes of a permanent establishment in a territory outside the United Kingdom at any time during a relevant preceding accounting period.

(5)For the purposes of subsection (4)(a) plant or machinery used together constitutes a group of assets.

(6)In subsection (4) “relevant preceding accounting period” means the accounting period in which the election under section 18A is made or an earlier accounting period ending less than 6 years before the end of that accounting period.]

Textual Amendments

F346S. 62A inserted (19.7.2011) by Finance Act 2011 (c. 11), Sch. 13 paras. 17, 31 (with Sch. 13 para. 36)

63 Cases in which disposal value is nilU.K.

(1)If a person disposes of plant or machinery by way of gift in circumstances such that there is a charge to tax under [F347ITEPA 2003], the disposal value of the plant or machinery is nil.

(2)If a person carrying on a relevant qualifying activity makes a gift of plant or machinery used in the course of the activity—

(a)to a [F348charitable trust F349...],

[F350(aa)to a charitable company F351...,

(ab)to a registered club within the meaning of Chapter 9 of Part 13 of CTA 2010 (community amateur sports clubs),]

(b)to a body listed in [F352section 468 of CTA 2010] (various heritage bodies and museums), or

(c)for the purposes of a designated educational establishment within the meaning of [F353section 110 of ITTOIA 2005 or] [F354section 106 of CTA 2009] (gifts to educational establishments),

the disposal value of the plant or machinery is nil.

(3)In subsection (2) “relevant qualifying activity” means a qualifying activity consisting of—

(a)a trade,

(b)an ordinary [F355UK] [F356property] business,

(c)a [F357UK furnished] holiday lettings business,

(d)an [F358ordinary overseas] property business, F359...

[F360(da)an EEA furnished holiday lettings business, or]

(e)a profession or vocation.

(4)Subsection (2) [F361

(a)]needs to be read with [F362section 109 of ITTOIA 2005 and] [F363section 108 of CTA 2009] (which provide for a charge to tax if subsection (2) applies in circumstances in which the donor or a connected person receives a benefit attributable to the gift)[F364, and

(b)is subject to section 809ZM of ITA 2007 and section 939F of CTA 2010 (removal of tax relief in respect of tainted charity donations etc).]

(5)If expenditure is treated under section 27(2) (expenditure on thermal insulation, safety measures, etc.) as having been incurred on plant or machinery, the disposal value of the plant or machinery is nil.

Textual Amendments

F347 Words in s. 63(1) substituted (with effect in accordance with s. 723(1)(a)(b) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1) , s. 723 , Sch. 6 para. 250 (with Sch. 7 )

F348Words in s. 63(2)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 328(a) (with Sch. 2)

F349Words in s. 63(2)(a) omitted (with effect in accordance with art. 12 of the commencing S.I.) by virtue of Finance Act 2010 (c. 13), Sch. 6 paras. 16(a)34(2); S.I. 2012/736, art. 12

F350S. 63(2)(aa)(ab) inserted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 328(b) (with Sch. 2)

F351Words in s. 63(2)(aa) omitted (with effect in accordance with art. 12 of the commencing S.I.) by virtue of Finance Act 2010 (c. 13), Sch. 6 paras. 16(b)34(2); S.I. 2012/736, art. 12

F352Words in s. 63(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 328(c) (with Sch. 2)

F353 Words in s. 63(2)(c) inserted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 535(2) (with Sch. 2 )

F354Words in s. 63(2)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 482(2) (with Sch. 2 Pts. 1, 2)

F355Word in s. 63(3)(b) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(10)(a)

F356 Word in s. 63(3)(b) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5) , s. 883(1) , Sch. 1 para. 535(3) (with Sch. 2 )

F357Words in s. 63(3)(c) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(10)(b)

F358Words in s. 63(3)(d) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(10)(c)

F359Word in s. 63(3)(d) omitted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by virtue of Finance Act 2011 (c. 11), Sch. 14 para. 12(10)(d)

F360S. 63(3)(da) inserted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(10)(d)

F361Words in s. 63(4) renumbered as s. 63(4)(a) (with effect in accordance with Sch. 3 para. 27 of the amending Act) by Finance Act 2011 (c. 11), Sch. 3 para. 4(a)

F363Words in s. 63(4) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 482(3) (with Sch. 2 Pts. 1, 2)

F364S. 63(4)(b) and word inserted (with effect in accordance with Sch. 3 para. 27 of the amending Act) by Finance Act 2011 (c. 11), Sch. 3 para. 4(b)

Modifications etc. (not altering text)

C65S. 63(2) modifed (with effect as mentioned in s. 58(4) of the amending Act) by Finance Act 2002 (c. 23), s. 58, Sch. 18 para. 9(3)(c)

64 Case in which no disposal value need be brought into accountU.K.

(1)A person is not required to bring a disposal value into account in a pool for a chargeable period in respect of plant or machinery if none of the qualifying expenditure is or has been taken into account in a claim in determining the person’s available qualifying expenditure in the pool for that or any previous chargeable period.

(2)Subsection (3) applies if—

(a)a person (“C”) has incurred qualifying expenditure on plant or machinery,

(b)C acquired the plant or machinery as a result of a transaction which was, or a series of transactions each of which was, between connected persons,

(c)any connected person (apart from C) who was a party to the transaction, or one of the series of transactions, is or has been required to bring a disposal value into account as a result of the transaction,

(d)a disposal event (“the relevant disposal event”) occurs in respect of the plant or machinery at a time when it is owned by C, and

(e)none of C’s qualifying expenditure is or has been taken into account in a claim in determining C’s available qualifying expenditure for the chargeable period in which the relevant disposal event occurs or any previous chargeable period.

(3)If this subsection applies—

(a)subsection (1) does not apply in relation to the relevant disposal event, and

(b)C’s qualifying expenditure is to be treated as allocated to the appropriate pool for the chargeable period in which the relevant disposal event occurs.

(4)In subsection (3)—

(a)qualifying expenditure” means, if a first-year allowance has been made to C, the amount (including a nil amount) remaining after deducting the allowance, and

(b)the appropriate pool” means whichever pool is applicable in relation to C under the provisions of this Part.

(5)A person takes expenditure into account in a claim if he takes it into account—

(a)in a tax return;

(b)by giving notice of an amendment of a tax return;

(c)in any other claim under this Part.

[F36564ALeased assets: arrangements reducing disposal value of assetU.K.

(1)Where—

(a)plant or machinery (“the asset”) is subject to a lease,

(b)a disposal event occurs with the result that a disposal value in respect of the asset is to be brought into account under Item 1, 2 or 7 of the Table in section 61(2), and

(c)arrangements have been entered into that have the effect of reducing the disposal value of the asset in so far as it is attributable to rentals payable under the lease,

the disposal value is to be determined as if the arrangements had not been entered into.

(2)Subsection (1) does not apply if—

(a)the arrangements take the form of a transfer of relevant receipts within section 809AZA of ITA 2007 and the relevant amount has been treated as income under section 809AZB of that Act, or

(b)the arrangements take the form of a transfer of relevant receipts within section 752 of CTA 2010 and the relevant amount has been treated as income under section 753 of that Act.]

Textual Amendments

F365S. 64A inserted (8.4.2010) (with effect in accordance with Sch. 5 para. 3(2) to the amending Act) by Finance Act 2010 (c. 13), Sch. 5 para. 3(1)

The final chargeable periodU.K.

65 The final chargeable periodU.K.

(1)The final chargeable period for—

(a)the main pool, or

[F366(b)a special rate pool,]

is the chargeable period in which the qualifying activity is permanently discontinued.

(2)The final chargeable period for a single asset pool is the first chargeable period in which any disposal event given in section 61(1) occurs.

(3)Subsection (2) is subject to—

  • [F367section] 206(4) (no final chargeable period merely because plant or machinery begins to be used partly for purposes other than those of qualifying activity);

  • sections 86(2) and 87(2) (ending of short-life asset pool at [F368relevant] cut-off without final chargeable period);

  • section 132(2) (no final chargeable period for single ship pool).

(4)The final chargeable period for a class pool under section 107 (overseas leasing) is the chargeable period at the end of which the circumstances are such that there can be no more disposal receipts in any subsequent chargeable period.

Textual Amendments

F366S. 65(1)(b) substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 5

F367Word in s. 65(3) substituted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1), 29(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 17 (with Sch. 11 paras. 30-32)

F368Word in s. 65(3) substituted (19.7.2011) by Finance Act 2011 (c. 11), s. 12(3)

List of provisions outside this Chapter about disposal valuesU.K.

66 List of provisions outside this Chapter about disposal valuesU.K.

The provisions of this Part referred to in section 60(1)(b) are—

section 68hire-purchase etc.: disposal value on cessation of notional ownership
[F369section 70E long funding leases: disposal events and disposal values]
sections 72 and 73grant of new software right: disposal value
F370. . .F370. . .
sections 88 and 89short-life assets: disposal at under-value or to connected person
[F371section 104E special rate expenditure: avoidance cases]
sections 108, 111 and 114overseas leasing: disposal values in various cases
sections 132 and 143ships: ship used for overseas leasing etc.; attribution of amount where balancing charge deferred
section 171oil production sharing contracts: disposal values on cessation of ownership
sections 196 and 197fixtures: disposal values on cessation of notional ownership and in avoidance cases
section 208effect of significant reduction in use of plant or machinery for purposes of qualifying activity
[F372section 208A cars: disposal value in avoidance cases]
section 211effect of payment of partial depreciation subsidy
F373. . .F373. . .
[F374section 218ZB disposal of plant or machinery in avoidance cases]
[F375sections 228K to 228M Disposal of plant or machinery subject to lease where income retained]
section 229hire-purchase: disposal values in finance leasing and anti-avoidance cases
sections 238 and 239additional VAT rebates

Textual Amendments

F369Words in s. 66 inserted (with effect in accordance with Sch. 32 para. 8 to the amending Act) by Finance Act 2009 (c. 10), Sch. 32 para. 6

F370S. 66 entry omitted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1), 29(2) to the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 11 para. 18(a) (with Sch. 11 paras. 30-32)

F371Words in s. 66 substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 6

F372Words in s. 66 inserted (with effect in accordance with Sch. 11 paras. 26, 27, 28(1) to the amending Act) by Finance Act 2009 (c. 10), Sch. 11 para. 18(b) (with Sch. 11 paras. 30-32)

F373S. 66 entry omitted (with effect in accordance with Sch. 20 para. 6(19) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 20 para. 6(5)

F374Words in s. 66 inserted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(10)

F375Words in s. 66 inserted (with effect in accordance with s. 84(5)(6) of the amending Act) by Finance Act 2006 (c. 25), s. 84(2)

[F376Application of Chapter to person leaving cash basisU.K.

Textual Amendments

F376S. 66A and cross-heading inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 48

66APersons leaving cash basisU.K.

[F377(1)This section applies if—

(a)a person carrying on a trade, profession, vocation or property business (“the business”) leaves the cash basis in a chargeable period,

(b)the person has incurred expenditure at a time when the profits of the business are calculated on the cash basis,

(c)some or all of the expenditure was brought into account in calculating the profits of the business on the cash basis, and

(d)the expenditure would have been qualifying expenditure if the profits of the business had not been calculated on the cash basis at the time the expenditure was incurred.]

(2)In this section—

(a)the “relieved portion” of the expenditure is the [F378higher of the following]

(i)[F379the amount of that expenditure for which] a deduction was allowed in calculating the profits of the trade, profession[F380, vocation or property business], or

(ii)[F379the amount of that expenditure for which] a deduction would have been so allowed if the expenditure had been incurred wholly and exclusively for the purposes of the trade, profession[F380, vocation or property business];

(b)the “unrelieved portion” of the expenditure is any remaining amount of the expenditure.

(3)For the purposes of determining any entitlement of the person to an annual investment allowance or a first-year allowance, the person is to be treated as incurring the unrelieved portion of the expenditure in the chargeable period.

(4)For the purposes of determining the person's available qualifying expenditure in a pool for the chargeable period (see section 58)—

(a)the whole of the expenditure must be allocated to the appropriate pool (or pools) in that chargeable period, and

(b)the available qualifying expenditure in a pool to which the expenditure (or some of it) is allocated is reduced by the relieved portion of that expenditure.

(5)For the purposes of determining any disposal receipts (see section 60), the expenditure incurred by the person is to be regarded as qualifying expenditure.

(6)For the purposes of this section a person carrying on a trade, profession or vocation leaves the cash basis in a chargeable period if—

(a)immediately before the beginning of the chargeable period [F381the cash basis applied] in relation to the trade, profession or vocation, and

(b)[F382the cash basis does not apply] in relation to the trade, profession or vocation for the chargeable period.

[F383(7)For the purposes of this section a person carrying on a property business leaves the cash basis in a chargeable period (“tax year X”) if the profits of the business are calculated—

(a)in accordance with GAAP (see section 271B of ITTOIA 2005) for tax year X, and

(b)on the cash basis (see section 271D of that Act) for the previous tax year.

(8)Subsection (11) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.]]

Textual Amendments

F377S. 66A(1) substituted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 53(2)

F378Words in s. 66A(2)(a) substituted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 53(3)(a)

F379Words in s. 66A(2)(a)(i)(ii) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 53(3)(b)

F380Words in s. 66A(2)(a) substituted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 53(3)(c)

F381Words in s. 66A(6)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 41(a), 47 (with Sch. 10 paras. 48-50)

F382Words in s. 66A(6)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 41(b), 47 (with Sch. 10 paras. 48-50)

F383S. 66A(7)(8) inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 53(4)

[F384Effect of changes in Northern Ireland status of SME company or SME partnershipU.K.

Textual Amendments

F384Ss. 66B-66E and cross-heading inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 7

66B SME company entering NI corporation tax regimeU.K.

(1)This section applies if—

(a)in a chargeable period beginning after the commencement day (“the relevant period”) a company is [F385an SME (Northern Ireland employer) company],

(b)the company was neither [F386an SME (Northern Ireland employer) company] nor a NIRE company in the previous chargeable period, and

(c)the company has not become [F387an SME (Northern Ireland employer) company] in the relevant period as a result of an election under section 357KB(2) of CTA 2010 (back-office activities of financial trades).

(2)The fact that assets which continue to be used in the relevant period for the purposes of the trade actually carried on by the company are as a result of section 15(2ZA) treated as ceasing to be used for the purposes of a main rate activity and beginning to be used for the purposes of an NI rate activity does not give rise to a disposal event within 61(1)(e) or (f).

(3)If during the relevant period the only qualifying activity carried on by the company is an NI rate activity, the amount of any unrelieved qualifying expenditure in any main pool or special rate pool falling to be carried forward to the relevant period is to be treated as relating to plant and machinery used for the purposes of the NI rate activity.

(4)If during the relevant period the company carries on both an NI rate activity and a main rate activity—

(a)the amount of any unrelieved qualifying expenditure in any main pool falling to be carried forward under section 59 to the relevant period is to be apportioned on a just and reasonable basis to become—

(i)a main pool that is to be treated as relating to plant and machinery used for the purposes of the NI rate activity, and

(ii)a main pool that is to be treated as relating to plant and machinery used for the purposes of the main rate activity, and

(b)the amount of any unrelieved qualifying expenditure in any special rate pool falling to be carried forward under section 59 to the relevant period is to be apportioned on a just and reasonable basis to become—

(i)a special rate pool that is to be treated as relating to plant and machinery used for the purposes of the NI rate activity, and

(ii)a special rate pool that is to be treated as relating to plant and machinery used for the purposes of the main rate activity.

(5)Main rate activity” means the company's trade except so far as it is an NI rate activity.

(6)The commencement day” has the meaning given by section 5(4) of the Corporation Tax (Northern Ireland) Act 2015.

Textual Amendments

F385Words in s. 66B(1)(a) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(e)

F386Words in s. 66B(1)(b) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(e)

F387Words in s. 66B(1)(c) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32), Sch. 7 para. 24(e)

66C SME partnership entering NI corporation tax regimeU.K.

For the purposes of the corporate partner calculation, section 66B applies in relation to a partnership as if—

(a)references to a company were references to a partnership,

(b)references to [F388an SME (Northern Ireland employer) company] were references to a Northern Ireland Chapter 6 firm,

(c)the reference to a NIRE company were a reference to a Northern Ireland Chapter 7 firm,

(d)the reference to section 357KB(2) of CTA 2010 were a reference to section 357WB(2) of that Act, and

(e)the reference to section 15(2ZA) were a reference to section 15(2ZB).

Textual Amendments

F388Words in s. 66C(b) substituted (16.11.2017) by Finance (No. 2) Act 2017 (c. 32),