http://www.legislation.gov.uk/ukpga/2001/2/part/2ACapital Allowances Act 2001An Act to restate, with minor changes, certain enactments relating to capital allowances.2001-04-05texttext/xmlenStatute Law Database2025-05-05Expert Participation2025-03-20 Capital Allowances Act 2001s. 774E(5)(b)Finance Act 2008Sch. 20 para. 12(11)Capital Allowances Act 2001s. 29(1A)The Fire and Rescue Services (Northern Ireland) Order 2006Sch. 3 para. 24(b)art. 1(3)art. 2 PART 2ACHAPTER 1270AA1This Part applies if—athe construction of a building or structure begins on or after 29 October 2018,bqualifying expenditure is incurred, on or after that date, on its construction or acquisition, andcthe first use of the building or structure, after the qualifying expenditure is incurred, is non-residential use.2A person is entitled to an allowance, in relation to a qualifying activity, for a chargeable period if—ain respect of any day during that chargeable period—ithe person has the relevant interest in the building or structure in relation to the qualifying expenditure, andiithe building or structure is in non-residential use; andb the beginning of that day falls—i on or after the later of the day on which the building or structure is first brought into qualifying use by the person and the day on which the qualifying expenditure is incurred (in either case, whether the day is in the same or an earlier chargeable period), andiiwithin the period of the length specified in subsection (2A), beginning with the later of the day on which the building or structure is first brought into non-residential use and the day on which the qualifying expenditure is incurred.2AThe length of the period referred to in subsection (2)(b)(ii) is—ain the case of special tax site qualifying expenditure, 10 years, andbin the case of other qualifying expenditure, 33 1/3 years.3A building or structure which—ais not in use, butbwas, immediately before it fell into disuse, in non-residential use,is treated, for the purposes of subsection (2)(a)(ii), as continuing to be in non-residential use.4A person ceases to be entitled to an allowance under this section if the building or structure is demolished.5The basic rule is that the allowance, in relation to a qualifying activity, for a chargeable period of one year is — ain the case of special tax site qualifying expenditure, 10% of the expenditure, andbin the case of other qualifying expenditure, 3% of the expenditure.6In this section— “special tax site qualifying expenditure” has the meaning given by section 270BNA; “qualifying activity” has the meaning given by section 270CA;“qualifying expenditure” has the meaning given by section 270BA;“qualifying use” has the meaning given by section 270CE;“relevant interest” is to be construed in accordance with Chapter 4;“residential use” and “non-residential use” have the meaning given by section 270CF.7This section is subject to the following provisions of this Part.270ABFor the purposes of section 270AA(1)(a), the construction of a building or structure is treated as beginning before 29 October 2018 if any contract for works to be carried out in the course of the construction of that particular building or structure (whether or not the contract also relates to the construction of other buildings or structures) is entered into before that date.CHAPTER 2270BAIn this Part “qualifying expenditure” means expenditure which—ais qualifying capital expenditure under any of sections 270BB to 270BE (expenditure on construction or purchase), andbis not excluded expenditure under—isection 270BG (acquisition or alteration of land),iisection 270BH (market value rule), oriiisection 270BI (provision of plant or machinery).270BB1If—acapital expenditure is incurred on the construction of a building or structure, andbthe relevant interest in the building or structure has not been sold or, if it has been sold, it has been sold only after the building or structure has been brought into non-residential use,the capital expenditure is qualifying capital expenditure.2Subsection (3) applies where capital expenditure as mentioned in subsection (1)(a) is incurred in relation to a building or structure—aafter it has been brought into non-residential use, andbon different days (whether or not in the same chargeable period).3The expenditure may be treated for the purposes of this Part as being incurred—aon the latest day on which qualifying capital expenditure on the construction is incurred,bon the first day of the chargeable period following the period in which the day mentioned in paragraph (a) falls, orcon the first day of the chargeable period following the period in which the day on which the expenditure is incurred falls.270BC1This section applies if—acapital expenditure is incurred on the construction of a building or structure,bthe relevant interest in the building or structure is sold before the building or structure is first used,ca capital sum is paid by the purchaser for the relevant interest, anddsection 270BD (sale by a developer: unused buildings or structures) does not apply.2The lesser of—athe capital sum paid by the purchaser for the relevant interest, andbthe capital expenditure incurred on the construction,is qualifying capital expenditure.3Where this section applies, the qualifying expenditure is to be treated as incurred by the purchaser when the capital sum is paid.4If the relevant interest is sold more than once before the building or structure is first used, subsection (2) has effect only in relation to the last of those sales.270BD1This section applies if—aexpenditure is incurred by a developer on the construction of a building or structure, andbthe relevant interest in the building or structure is sold by the developer in the course of the development trade before the building or structure is first used.2If—athe sale of the relevant interest by the developer was the only sale of that interest before the building or structure is first used, andba capital sum is paid by the purchaser for the relevant interest,the capital sum is qualifying capital expenditure.3If—athe sale by the developer was not the only sale before the building or structure is first used, andba capital sum is paid by the purchaser for the relevant interest on the last sale before the building or structure is first used,the lesser of that capital sum and the sum paid for the relevant interest on its sale by the developer is qualifying capital expenditure.4Where this section applies, the qualifying expenditure is to be treated as incurred by the purchaser when the capital sum referred to in subsection (2)(b) or (3)(b) is paid.270BE1This section applies if—aexpenditure is incurred by a developer on the construction of a building or structure, andbthe relevant interest is sold by the developer in the course of the development trade after the building or structure has been used.2This Part has effect in relation to the person to whom the relevant interest is sold (and any person who subsequently acquires the relevant interest) as if the expenditure on the construction of the building or structure had been qualifying capital expenditure.270BFFor the purposes of sections 270BD, 270BE and 270BJ—aa developer is a person who carries on a trade which consists in whole or part in the construction of buildings or structures with a view to their sale, andban interest in a building or structure is sold by the developer in the course of the development trade if the developer sells it in the course of the trade or (as the case may be) that part of the trade that consists in the construction of buildings or structures with a view to their sale.270BG1Expenditure incurred—aon the acquisition of land or rights in or over land, orbon altering land,is “excluded expenditure” for the purposes of this Part.2Expenditure incurred on, or in connection with, seeking planning permission (including fees and related costs) is “excluded expenditure” for the purposes of this Part.3In subsection (1), the reference to expenditure incurred on an acquisition includes a reference to—afees,bstamp duty land tax, land and buildings transaction tax or land transaction tax, andcother incidental costs attributable to the acquisition.4For the purposes of subsection (1), “altering land” means—aland reclamation,bland remediation, andclandscaping (other than so as to create a structure).5In this section “land remediation” means—ain relation to land which is in a contaminated state—iactivities in respect of which conditions A to C in section 1146 of CTA 2009 (contaminated land remediation) are met, andiirelevant preparatory activity as defined in subsection (4) of that section;bin relation to land which is in a derelict state—iactivities in respect of which conditions A and B in section 1146A of CTA 2009 (derelict land remediation) are met, andiirelevant preparatory activity as defined in subsection (5) of that section.6In subsection (5), references to land in a contaminated or derelict state have the same meaning as they have for the purposes of Part 14 of CTA 2009 (remediation of contaminated or derelict land).7Subsection (1)(b) is subject to section 270BK (preparation of sites).8In this section, except in subsections (4)(b), (5) and (6), “land” does not include buildings or structures.9In this section—“planning permission” has the meaning given by the relevant planning enactment;“relevant planning enactment” has the meaning given by section 436(2).270BH1Expenditure is “excluded expenditure” for the purposes of this Part if, and to the extent that, it exceeds—ain a case where the qualifying capital expenditure under section 270BC or 270BD is the capital sum paid for the relevant interest in the building or structure, the market value of the interest (see section 577(1)), orbin any other case, the market value amount of the works, services and other matters to which it relates.2The “market value amount” means the amount of expenditure which it would have been normal and reasonable to incur on the works, services or other matters—ain the market conditions prevailing when the expenditure was incurred, andbassuming the transaction as a result of which the expenditure was incurred was between persons dealing with each other at arm’s length in the open market.270BIExpenditure which is capital expenditure on the provision of plant or machinery for the purposes of Part 2 (plant and machinery allowances) is “excluded expenditure” for the purposes of this Part.270BJ1This Part has effect in relation to expenditure incurred by a person—aon the renovation or conversion of a part of a building or structure, orbon repairs to a part of a building or structure that are incidental to the renovation or conversion of that part,as if it were expenditure on the construction of that part of the building or structure for the first time.2For the purposes of subsection (1), sections 270AA(1)(a) and 270AB have effect, in relation to a building or structure that has been brought into use before 29 October 2018, as if the renovation or conversion of, or repairs to, part of the building or structure were the construction of that part for the first time.2AFor the purposes of subsection (1), in relation to a building or structure that has been brought into use at a time when the area in which the building or structure is situated was not a special tax site, section 270BNA(2) and (7) have effect as if the renovation or conversion of, or repairs to, part of the building or structure were the construction of that part for the first time.3For the purposes of subsection (1), expenditure incurred as mentioned in subsection (1)(a) or (b) for the purposes of a qualifying activity is to be treated as capital expenditure if it is not expenditure that may be allowed to be deducted in calculating the profits of the qualifying activity for tax purposes.270BK1This section applies if a person incurs capital expenditure, other than expenditure on altering land (within the meaning of section 270BG(4)), for the purposes of preparing land as a site for the construction of a building or structure.2This Part has effect in relation to the expenditure as if it were capital expenditure on the construction of the building or structure.3For that purpose, sections 270AA(1)(a), 270AB and 270BNA(2) and (7) have effect as if the preparation of the land mentioned in subsection (1) were the construction of the building or structure.270BL1If, for the purposes of this Part, an item of expenditure falls to be apportioned between expenditure for which an allowance can be made under this Part and other expenditure, the apportionment is to be made on a just and reasonable basis.2If the sum paid for the sale of the relevant interest in a building or structure is attributable—apartly to assets representing expenditure for which an allowance can be made under this Part, andbpartly to assets representing other expenditure,only so much of the sum as on a just and reasonable apportionment is attributable to the assets referred to in paragraph (a) is to be taken into account for the purposes of this Part.270BMFor the purposes of this Part—athe expenditure on the construction of the building or structure is the sum of those items of expenditure the actual amount of which can be shown, andbwhere there are no such items, the amount of expenditure is taken to be nil.270BNFor the purposes of this Part, if a person incurs expenditure for the purposes of a qualifying activity—aon or after 29 October 2018, andbbefore the date on which the person starts to carry on that activity,the expenditure is to be treated as if it were incurred by the person on the date mentioned in paragraph (b).CHAPTER 2A270BNA1In this Part, qualifying expenditure incurred on the construction or acquisition of a building or structure is “special tax site qualifying expenditure” if conditions A to E are met.2Condition A is that construction of the building or structure begins at a time when the area in which the building or structure is situated is a special tax site.3Condition B is that the building or structure is first brought into qualifying use by the person entitled to the allowance under this Part—aat a time when the area in which the building or structure is situated is a special tax site, andbon or before the 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).4Condition C is that the qualifying expenditure is incurred—aat a time when the area in which the building or structure is situated is a special tax site, andbon or before the applicable sunset date in relation to the special tax site concerned.5Condition D is that the person who incurs the qualifying expenditure is within the charge to income tax or corporation tax when it is incurred.6Condition E is that an allowance statement—amade for the purposes of section 270IA by the person who incurred the qualifying expenditure, andbrelied on for the purposes of the first valid claim for an allowance under this Part in respect of that expenditure,states that the person wants the expenditure to be special tax site qualifying expenditure.7For the purposes of subsection (2), the construction of a building or structure is treated as beginning when the first contract for works to be carried out in the course of the construction of that particular building or structure (whether or not the contract also relates to the construction of other buildings or structures) is entered into.8This section is subject to regulations under section 270BNC.270BNB1Subsection (2) applies if, on the later of—athe day on which the building or structure is first brought into non-residential use, andbthe day on which the qualifying expenditure is incurred,a building or structure is situated only partly in an area that is a special tax site.2Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part situated in the special tax site is to be treated as special tax site qualifying expenditure.3Subsection (4) applies if a building or structure is first brought into qualifying use by the person entitled to the allowance under this Part partly on or before the applicable sunset date in relation to the special tax site concerned and partly after that date.4Only so much of the qualifying expenditure as, on a just and reasonable apportionment, is attributable to the part first brought into qualifying use by that person on or before that date is to be treated as special tax site qualifying expenditure.270BNC1The Treasury may by regulationsachange the conditions that must be met in order for qualifying expenditure to be “special tax site qualifying expenditure” for the purposes of this Part (whether by adding, removing or altering conditions) , orbmake provision adding, removing or altering, or otherwise about, circumstances in which qualifying expenditure is to be treated as if it were—i special tax site qualifying expenditure, oriiother qualifying expenditure,including provision about assessments, adjustments to assessments, returns, amendments of returns and penalties.2Regulations under this section—amay not remove the requirement for the building or structure to be situated in an area that is a special tax site, butbmay alter the time when that requirement must be satisfied.3Regulations under this section may, among other things—amake provision by reference to the expenditure, the building or structure, the person who incurred the expenditure or a person who is or has been connected with that person;bimpose conditions relating to accounts or other records;cimpose other conditions requiring a person to take steps specified in the regulations;dmake different provision for different purposes;einclude incidental, supplementary, consequential, transitional or transitory provision.4Regulations under this section—amay amend, repeal or otherwise modify section 270BNA and other provisions of this Part, andbwhere made under subsection (1)(b) or (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.5The power to make regulations under subsection (1)(b) may be exercised only in relation to qualifying expenditure incurred on or after the date on which the regulations come into force.CHAPTER 3270CAEach of the following is a qualifying activity for the purposes of this Part—aa trade,b a UK property business,can ... overseas property business,da profession or vocation,ethe carrying on of a concern listed in section 12(4) of ITTOIA 2005 or section 39(4) of CTA 2009 (mines, quarries and other concerns), andfmanaging the investments of a company with investment business,but only to the extent that the profits or gains from the activity are, or (if there were any) would be, chargeable to tax.270CB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .270CCA 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 (exemption for profits or losses of foreign permanent establishments) has effect—ais an activity separate from any other activity of the company, andbis to be regarded for the purposes of this Part as an activity all the profits and gains from which are not, or (if there were any) would not be, chargeable to tax.270CD1For 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 section 1219 of CTA 2009.2In this Part “company with investment business” has the same meaning as in Part 16 of CTA 2009 (see section 1218B of that Act).270CE1A building or structure is in “qualifying use” for the purposes of this Part if it is in non-residential use for the purposes of a qualifying activity carried out by the person who has the relevant interest in the building or structure.2But a building or structure is not treated for the purposes of subsection (1) as being in use for the purposes of a particular activity if the extent to which it is in use for those purposes is insignificant.3The extent to which a building or structure is in use for the purposes of a particular activity is to be determined on a just and reasonable basis.4Section 270EB makes provision for the calculation of the allowance in the case of a building or structure that is put to multiple uses.270CF1For the purposes of this Part, a building or structure is in “residential use” if—ait is used by any person as, or for purposes ancillary to use as—ia dwelling-house,iiresidential accommodation for school pupils,iiistudent accommodation (see subsection (3)),ivresidential accommodation for members of the armed forces,va home or other institution providing residential accommodation (whether for children or adults), except where the accommodation is provided with personal care for persons in need of personal care by reason of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder, orvia prison or similar establishment, orbit falls within—iparagraph 4 of Schedule 14 to the Housing Act 2004 (buildings in England or Wales occupied by students and managed or controlled by educational establishment etc), oriiany corresponding provision having effect in Scotland or Northern Ireland,(and a building or structure is in “non-residential use” if it is in use which is not residential use).2A building or structure that is situated on land that is, or is intended to be, occupied or enjoyed with a building or structure that is in residential use as a garden or grounds is to be treated for the purposes of this Part as being in residential use.3For the purposes of this Part, a building or structure is in use as student accommodation if—athe accommodation is purpose-built, or is converted, for occupation by students, andbthe accommodation is available for occupation by students on at least 165 days of each calendar year.4For the purposes of subsection (3), accommodation is occupied by students if it is occupied exclusively or mainly by persons who occupy it for the purpose of undertaking a course of education (otherwise than as school pupils).5Any part of a building or structure that is used as a dwelling-house (whether or not it is also used for any other purposes) is not in qualifying use.270CG1A building or structure is to be treated, for the purposes of this Part, as being used for the purposes of a UK property business or an overseas property business during any period in respect of which subsection (2) applies.2This subsection applies in relation to a building or structure if the person with the relevant interest is entitled, under the terms of a lease or otherwise, to rents, or other receipts, in respect of the building or structure of such amounts as may reasonably have been expected to have been payable if the transaction had been between persons dealing with each other at arm’s length in the open market.3For the purposes of this section, “rents” and “other receipts” have the same meaning as in section 266 of ITTOIA 2005.CHAPTER 4270DA1The relevant interest in relation to any qualifying expenditure is the interest in the building or structure to which the person who incurred the expenditure on its construction was entitled when the expenditure was incurred.2Subsection (1) is subject to the following provisions of this Chapter and to sections 270FB (highway undertakings) and 270IG (provisions applying on termination of lease).3If—athe person who incurred the expenditure on construction was entitled to more than one interest in the building or structure when the expenditure was incurred, andbone of those interests was reversionary on all the others,the reversionary interest is the relevant interest.4For the purposes of section 270AA(2), on the sale of the relevant interest in a building or structure, the seller (and not the purchaser) is treated as the person who has the relevant interest on the day of transfer.270DBFor the purposes of determining the relevant interest, a person who—aincurs expenditure on the construction of a building or structure, andbis entitled to an interest in the building or structure on or as a result of the completion of the construction,is treated as having had that interest when the expenditure was incurred.270DC1An interest does not cease to be the relevant interest merely because of the creation of a lease or other interest to which that interest is subject.2This is subject to section 270DD (leases granted for 35 years or more).270DD1This section applies if—aqualifying capital expenditure has been incurred on the construction or acquisition of a building or structure,ba lease of the building or structure is granted out of the interest which is the relevant interest in relation to the qualifying expenditure, andcthe effective duration of the lease is equal to, or exceeds, 35 years.2If the market value of the retained interest in the building or structure is less than one third of the capital sum given as consideration for the lease—athe lessee is treated, for the purposes of this Part, as acquiring the relevant interest in the building or structure on the grant of the lease, andbon the expiry or surrender of the lease, the lessor is treated, for the purposes of this Part, as acquiring the relevant interest from the lessee.3The capital sum given as consideration for the lease is treated for the purposes of subsection (2) as excluding the amount, in respect of any premium required to be paid under the lease, that is brought into account as a receipt in calculating the lessor’s profits for the purposes of ITTOIA 2005 or CTA 2009 (determined in accordance with section 277 of ITTOIA 2005 or section 217 of CTA 2009).4For the purposes of this section, the “effective duration” of a lease is to be determined in accordance with section 303 of ITTOIA 2005 or section 243 of CTA 2009.270DE1Subsection (2) applies if the relevant interest is a leasehold interest which is extinguished on the person entitled to the interest acquiring the interest which is reversionary on it.2The interest into which the leasehold interest merges becomes the relevant interest when the leasehold interest is extinguished.CHAPTER 5270EA1This section applies if a person is entitled to an allowance under section 270AA(2) for a chargeable period.2If the chargeable period is more or less than one year, the allowance is proportionately increased or reduced.3If—athe conditions in section 270AA(2)(a) and (b)(i) are met on some, but not all, days during the chargeable period, aathe period mentioned in section 270AA(2)(b)(ii) expires part way through the chargeable period, orbentitlement to the allowance ceases under section 270AA(4) on any day during the chargeable period,the allowance is proportionately reduced.270EB1This section applies if—aa person is entitled to an allowance under section 270AA(2) by reference to a building or structure for a chargeable period, andbthe building or structure is put to multiple uses.2The allowance, in relation to a qualifying activity, for a chargeable period of one year is the relevant percentage of the appropriate proportion of the qualifying expenditure.3A building or structure is “put to multiple uses” if—athe building or structure is used for the purposes of two or more qualifying activities,bpart of the building or structure is in use for the purposes of a qualifying activity and part of the building or structure is in use for the purposes of another activity, orcpart of the building or structure, which is not an area within a dwelling-house, is used both for the purposes of a qualifying activity and for the purposes of another activity.3AFor the purposes of subsection (2), “the relevant percentage” means the percentage specified in section 270AA(5).4For the purposes of subsection (2), the “appropriate proportion” of the qualifying expenditure is the amount of that expenditure that would be apportioned to the qualifying activity if that expenditure were apportioned, on a just and reasonable basis, between all the activities for which the building or structure is used, having regard (in particular) to the extent to which the building or structure is used for each activity in the chargeable period.270EC1This section applies if, at any time, a person sells the relevant interest in a building or structure to another.2The total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest is reduced (but not below nil) by the amount of any Part 6 allowance to which the person is entitled by reference to the building or structure.3There is another restriction on the total amount of those allowances which applies if—athe sale in question, or a sale of the relevant interest at an earlier time, is by a person entitled to a Part 6 allowance by reference to the building or structure, andbthe amount paid for the relevant interest on any of those sales is less than the ordinary Part 2A amount (see subsection (6)).4The other restriction is that the total amount of the allowances under this Part by reference to the building or structure that is available to the person buying the relevant interest may not exceed the permitted maximum.5For this purpose “the permitted maximum” is—athe lowest sum paid for the relevant interest on the sale in question or any earlier sale within subsection (3)(a), lessbthe total amount of the allowances under this Part arising by reference to the building or structure since the earliest sale identified for the purposes of paragraph (a) of this subsection.6In this section “the ordinary Part 2A amount” means—athe amount of the qualifying expenditure, by reference to which an allowance can be made under this Part, incurred in relation to the building or structure before the time of the sale in question, lessbthe total amount of the allowances under this Part arising before that time by reference to the building or structure.7In this section any reference to allowances under this Part is to allowances to which an entitlement has arisen under this Part or would have arisen under this Part if the building or structure had been in continuous qualifying use since it was first brought into non-residential use.8In this section “Part 6 allowance”, in relation to a person and a building or structure, means an allowance under Part 6 in respect of expenditure incurred by the person on its construction or acquisition.CHAPTER 6270FA1For the purposes of this Part, the carrying on of a highway undertaking is to be treated as the carrying on of an undertaking by way of trade; and accordingly references in this Part to a trade include a highway undertaking.2For the purposes of this Part, a person carrying on a highway undertaking is to be treated as occupying, for the purposes of the undertaking, any road in relation to which it is carried on.3In this Chapter “highway undertaking” means so much of any undertaking relating to the design, building, financing and operation of roads as is carried on—afor the purposes of, orbin connection with,the exploitation of highway concessions.4In this Chapter “highway concession”, in relation to a road, means—aa right to receive sums from a public body because the road is or will be used by the general public, orbif the road is a toll road, the right to charge tolls in respect of the road.5In subsection (4) “public body” means the Crown or any government or public or local authority (whether in the United Kingdom or elsewhere).270FB1For the purposes of Chapter 4 (the relevant interest in the building or structure) as it applies to expenditure incurred on the construction of a road, a highway concession is not to be treated as an interest in the road.2But if the person who incurred the expenditure on the construction of the road—awas not entitled to an interest in the road when the person incurred the expenditure, butbwas at that time entitled to a highway concession in respect of the road,the highway concession is to be treated as the relevant interest in relation to that expenditure.270FC1A highway concession in respect of a road is to be treated as extended if—athe person entitled to the concession takes up a renewed concession in respect of the whole or a part of the road, orbthat person or a person connected with that person takes up a new concession in respect of—ithe whole or a part of the road, oriia road that includes the whole or a part of the road.2But the concession is to be treated as extended only—ato the extent that the concession which has in fact ended, and the renewed or new concession, relate to the same road, andbfor the period of the renewed or new concession.3A person who has ceased to be entitled to a highway concession is treated, for the purposes of this section, as taking up a renewed or new concession if—athe person is granted a renewed or new concession, orbthe arrangements for the concession otherwise continue (whether or not those arrangements are legally enforceable).4For the purposes of subsection (3), it does not matter whether the concession is renewed or replaced, or the arrangements for the concession continue, on the same terms or on modified terms.CHAPTER 7270GAFor the purposes of this Chapter—a“additional VAT liability” and “additional VAT rebate” have the meaning given by section 547,bthe time when—ia person incurs an additional VAT liability, oriian additional VAT rebate is made to a person,is given by section 548, andcthe chargeable period in which, and the time when, an additional VAT liability or an additional VAT rebate accrues are given by section 549.270GB1This section applies if—aa person is entitled to an allowance under this Part by reference to qualifying expenditure incurred by that person, andbthe person incurs an additional VAT liability in respect of the qualifying expenditure.2Subsection (3) applies for the purposes of calculating an allowance under this Part to which the person mentioned in subsection (1) is entitled—afor the chargeable period in which the additional VAT liability accrues, andbfor any subsequent chargeable period.3The amount of qualifying expenditure is treated as being increased, at the beginning of the chargeable period in which the additional VAT liability accrues, by the amount of the liability.4If, immediately before the end of the period mentioned in section 270AA(2)(b) (the “allowance period”), the person who is entitled to an allowance under this Part by reference to qualifying expenditure is the person who incurred that expenditure, that person is entitled to an additional amount of allowance for the chargeable period in which the allowance period ends.5The additional amount of allowance is the amount of the difference between—athe amount of the additional VAT liability, andbthe total amount of the allowance to which the person has been entitled during the allowance period in respect of the additional VAT liability.6But if an additional VAT rebate is made to the person in respect of the qualifying expenditure by reference to which this section applies, subsection (5) is subject to section 270GC(4) (limit on total allowance).270GC1This section applies if—aa person is entitled to an allowance under this Part by reference to qualifying expenditure incurred by that person, andban additional VAT rebate in respect of the qualifying expenditure is made to the person.2Subsection (3) applies for the purposes of calculating an allowance under this Part to which the person mentioned in subsection (1) is entitled for—athe chargeable period in which the additional VAT rebate accrues, andbany subsequent chargeable period.3The amount of qualifying expenditure is treated as being reduced, at the beginning of the chargeable period in which the additional VAT rebate accrues, by the amount of the rebate.4The total amount of the allowance available under this Part by reference to the qualifying expenditure incurred by the person mentioned in subsection (1) is limited to—athe amount of qualifying expenditure (including the amount of any additional VAT liability which is treated as qualifying expenditure under section 270GB), lessbthe amount of any additional VAT rebate by reference to which this section applies,(and sections 270AA(2)(b)(ii) and 270GB(5) are subject to this subsection). CHAPTER 7A270GD1This section applies if—aon the relevant date, a person is entitled to an allowance under this Part by reference to qualifying expenditure incurred in relation to a building or structure,bthe person does not dispose of the relevant interest in the building or structure before the end of the period mentioned in section 270AA(2)(b)(ii) (the “allowance period”), andcat the end of the allowance period, the person is entitled to an allowance under this Part by reference to the qualifying expenditure mentioned in paragraph (a).2The person is entitled to an additional amount of allowance for the chargeable period in which the allowance period ends.3The additional amount of the allowance is 1% of the qualifying expenditure multiplied by the following fraction—D/365where D is the number of days during the period beginning with 29 October 2018 and ending with the relevant date in respect of which an allowance under this Part by reference to the qualifying expenditure was made to the person.4For the purposes of this section “the relevant date” means—afor income tax purposes, 5 April 2020, orbfor corporation tax purposes, 31 March 2020. CHAPTER 8270HAIf the qualifying activity of a person who is entitled to an allowance for a chargeable period is a trade, the allowance is to be given effect in calculating the profits of that person’s trade, by treating the allowance as an expense of the trade.270HBIf the qualifying activity of a person who is entitled to an allowance for a chargeable period is—a a UK property business, orban ... overseas property business,the allowance is to be given effect in calculating the profits of that business by treating the allowance as an expense of that business.270HCIf the qualifying activity of a person who is entitled to an allowance for a chargeable period is carrying on a profession or vocation, the allowance is to be given effect in calculating the profits or gains of that person’s profession or vocation by treating the allowance as an expense of the profession or vocation.270HDIf the qualifying activity of a person who is entitled to an allowance for a chargeable period is a concern listed in section 12(4) of ITTOIA 2005 or section 39(4) of CTA 2009 (mines, transport undertakings etc) the allowance is to be given effect in calculating the profits of the concern under Chapter 2 of Part 2 of ITTOIA 2005 by treating the allowance as an expense of the concern.270HE1This section applies if the qualifying activity of a person entitled to an allowance for a chargeable period is managing the investments of a company with investment business.2The allowance is, as far as possible, to be given effect by deducting the amount of the allowance from any income for the period of the business; and section 1233 of CTA 2009 (addition of allowances to company’s expenses of management) applies only so far as it cannot be given effect in this way.3Except as provided by subsection (2), the Corporation Tax Acts apply in relation to the allowance as if it were required to be given effect in calculating the profits of that person’s trade for the purposes of Part 3 of CTA 2009.4Corresponding allowances in the case of the same building or structure are not to be made under this Part both under this section and in any other way.5Expenditure to which this section applies is not to be taken into account otherwise than under this Part or as provided by section 1233 of CTA 2009.6This section is subject to sections 682(3) and 699(3) of CTA 2010.270HF1Sections 270HG and 270HH apply if a company which is carrying on any long-term business is entitled to an allowance under this Part for a chargeable period in respect of a relevant interest in a building or structure consisting of a management asset.2In this section and section 270HG, “management asset” has the same meaning as in Chapter 1 of Part 12 (long-term business).270HG1This section applies if the long-term business of the company consists of—abasic life assurance and general annuity business, andbnon-BLAGAB long-term business.2Any allowance under this Part to which the company is entitled for a chargeable period in respect of a management asset must be apportioned between the businesses in accordance with Chapter 7 of Part 2 of FA 2012.270HH1This section applies if a company—acarries on basic life assurance and general annuity business, andbis charged to tax in accordance with the I-E rules in respect of that business.2Any allowance under this Part to which the company is entitled in respect of the basic life assurance and general annuity business is to be given effect by treating it for the purposes of section 76 of FA 2012 as a deemed BLAGAB management expense for the chargeable period in question.270HI1An allowance to which sections 270HG and 270HH apply is not to be given effect otherwise than in accordance with those sections.2Subsection (1) does not prevent any allowance which is to be given effect under those sections from being taken into account in any calculation for the purposes of—asection 93(5) of FA 2012 (minimum profits test), orbsection 103 of FA 2012 (rules for determining policyholders’ share of I-E profit).CHAPTER 9270IA1This section applies if a person (the “current owner”) is entitled to an allowance for a chargeable period under section 270AA by reference to a building or structure.2For the purposes of determining the amount of the allowance, the amount of the qualifying expenditure is treated as nil unless, before the current owner first makes a claim for an allowance under this Part, the allowance statement requirement is met.3The “allowance statement requirement” is met if—ain a case where the current owner incurred the qualifying expenditure in relation to the building or structure, the current owner makes an allowance statement;bin any other case, the current owner obtains (directly or indirectly) an allowance statement (or a copy of it) from any person who has previously been entitled to a relevant interest in the building or structure.4In this section an “allowance statement” means a written statement, identifying the building or structure to which it relates, of—athe date of the earliest ... contract for the construction of the building or structure,bthe amount of qualifying expenditure incurred on its construction or acquisition, cthe date on which the building or structure is first brought into non-residential use , anddwhere qualifying expenditure is incurred on the construction or acquisition of the building or structure after the date mentioned in paragraph (c), the date on which the expenditure is incurred.5Where the qualifying expenditure described in subsection (4)(b) consists of or includes special tax site qualifying expenditure (as defined in section 270BNA), a statement is not an allowance statement unless it states the amount of the special tax site qualifying expenditure.270IB1This section applies if at any time—aavoidance arrangements exist in relation to a building or structure (whether or not a person with a relevant interest in the building or structure is party to them), andbas a result of those arrangements, a person would, but for this section, obtain a tax advantage under this Part.2The tax advantage is to be counteracted by making such adjustments as are just and reasonable.3Adjustments made under this section may affect the tax treatment of persons other than the person in relation to whom the tax advantage is counteracted.4In subsection (1)(a) “avoidance arrangements” means arrangements the main purpose, or one of the main purposes, of which is to obtain a tax advantage (for any person) under this Part.5References in this section to obtaining a tax advantage under this Part include obtaining an allowance that is in any way more favourable to a person than the one that would otherwise be obtained.6In subsection (4) “arrangements” includes any agreement (including an agreed valuation), understanding, scheme, transaction or series of transactions (whether or not legally enforceable).270IC1This section applies where the participants in a co-ownership ...contractual scheme together carry on a qualifying activity.2Each participant in the scheme is for the purposes of this Part to be regarded as carrying on the qualifying activity.3Subsection (2) applies in relation to a participant only to the extent that the profits or gains arising to the participant from the qualifying activity are, or (if there were any) would be, chargeable to tax.4But in determining for the purposes of subsection (1) whether or to what extent the participants in a co-ownership ... contractual scheme together carry on a qualifying activity, assume that profits or gains arising to all participants from the qualifying activity are, or (if there were any) would be, chargeable to tax.270ID1The operator of a co-ownership authorised contractual scheme , or a converted Reserved Investor Fund (Contractual Scheme), may make an election under this section if an election under section 262AB (plant and machinery allowances: co-ownership schemes) has been made, before the relevant date, in relation to the scheme (whether or not that election has subsequently been withdrawn in accordance with section 262AEA).2The election must specify an accounting period of the scheme as the first accounting period in relation to which the election has effect.3But the election may not specify an accounting period ending—amore than 12 months before the election is made, orbmore than 12 months after the end of the accounting period in which a building or structure which is subject to the scheme, and by reference to which an allowance is available under this Part, is first brought into qualifying use.4The first accounting period must not be longer than 12 months.5The election has effect for that first accounting period and all subsequent accounting periods of the scheme.6The election is irrevocable.7The election is made by notice to an officer of Revenue and Customs.7AIn subsection (1)—aa “converted Reserved Investor Fund (Contractual Scheme)” means a Reserved Investor Fund (Contractual Scheme) that was previously a co-ownership authorised contractual scheme, andbthe reference to an election having been made under section 262AB in respect of a converted Reserved Investor Fund (Contractual Scheme) is a reference to such an election having been made in respect of the scheme when it was a co-ownership authorised contractual scheme.7BAn election under this section in respect of a converted Reserved Investor Fund (Contractual Scheme) is unaffected for so long as the scheme is—aa Reserved Investor Fund (Contractual Scheme),ba co-ownership authorised contractual scheme, orcan unauthorised contractual scheme,and the application of this Chapter in respect of the scheme is not affected by any change to the nature of the scheme so long as it remains of a type set out in paragraphs (a) to (c).8For the purposes of this section and section 270IE, the “relevant date” is the date on which this Part comes into force.270IE1This section applies if—aan election under section 270ID, orban election under section 262AB (plant and machinery allowances: co-ownership schemes) made on or after the relevant date,has effect for an accounting period of a co-ownership ... contractual scheme (“the relevant period”).2The operator of the scheme is to calculate the allowances that would be available to the scheme under this Part in relation to the relevant period on the basis of the assumptions in subsection (3).3The assumptions are—athe scheme is a person;bthe relevant period is a chargeable period for the purposes of this Act;cany qualifying activity carried on by the participants in the scheme together is carried on by the scheme;dproperty which was subject to the scheme at the beginning of the first accounting period for which the election has effect—iceased to be owned by the participants at that time, andiiwas acquired by the scheme at that time;eany property which became subject to the scheme at a time during an accounting period for which the election has effect was acquired by the scheme at that time;fproperty which ceased to be subject to the scheme at any such time ceased to be owned by the scheme at that time.4The operator of the co-ownership ... contractual scheme must allocate to each participant in the scheme a proportion (which may be zero) of the allowances calculated under this section.5The allocation is to be on the basis of what is just and reasonable.6In determining what is just and reasonable—aregard is to be had in particular to the relative size of each participant’s holding of units in the scheme;bno regard is to be had to—iwhether or to what extent a participant is liable to income tax or corporation tax, oriiany other circumstances relating to a participant’s liability to tax.7If the participants in the scheme together carry on more than one qualifying activity, the calculation and allocation under this section are to be made separately for each activity.8The proportion of an allowance allocated by the operator to a participant under this section for a qualifying activity is the total amount of the allowance available to the participant under this Part in relation to the relevant period by virtue of carrying on that activity as a participant in the scheme.9For the purposes of subsection (3)(c), assume that profits or gains arising to all participants from the qualifying activity are, or (if there were any) would be, chargeable to tax.10For the purposes of section 270IA (evidence of qualifying expenditure etc), the operator of a co-ownership scheme may be treated as—athe “current owner” in relation to property which is subject to the scheme, orbthe “previous owner” in relation to property which has ceased to be subject to the scheme.270IFSection 262AF (co-ownership schemes: definitions relating to schemes) applies for the purposes of sections 270IC to 270IE as it applies for the purposes of sections 262AA to 262AF.270IG1This section applies for the purposes of this Part.2A lease is treated as continuing if it is renewed, extended or replaced.3If a lease is terminated and, with the consent of the lessor, the lessee of a building or structure remains in possession of the building or structure after the termination without a new lease being granted to the lessee, the lease is treated as continuing so long as the lessee remains in possession.4If, on the termination of a lease, a new lease is granted to the lessee as a result of the exercise of an option available to the lessee under the terms of the first lease, the second lease is treated as a continuation of the first.5If, on the termination of a lease, the lessor pays a sum to the lessee in respect of a building or structure comprised in the lease, the lease is treated as if it had come to an end by surrender in consideration of the payment.6If—aon the termination of a lease, another lease is granted to a different lessee, andbin connection with the transaction that lessee pays a sum to the person who was the lessee under the first lease,the two leases are to be treated as if they were the same lease which had been assigned by the lessee under the first lease to the lessee under the second lease in consideration of the payment.270IH1In this Part “lease” includes—aan agreement for a lease if the term to be covered by the lease has begun,bany tenancy, andcin the case of land outside the United Kingdom, an interest corresponding to a lease,but does not include a mortgage (and “lessee”, “lessor” and “leasehold interest” are to be read accordingly).2In the application of this Part to Scotland—a“leasehold interest” (or “leasehold estate”) means the interest of a tenant in property subject to a lease, andbany reference to an interest which is reversionary on a leasehold interest or on a lease is to be read as a reference to the interest of the landlord in the property subject to the leasehold interest or lease.

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 Pt. 2A inserted (5.7.2019) by The Capital Allowances (Structures and Buildings Allowances) Regulations 2019 (S.I. 2019/1087), regs. 1, 2S. 270HG applied (with modifications) by The Friendly Societies (Modifications of the Tax Acts) Regulations 2012 (S.I. 2012/3008), reg. 4A (as inserted (5.7.2019) by S.I. 2019/1087, regs. 1, 11)Pt. 2A Ch. 7A inserted (1.4.2020 for corporation tax purposes and 6.4.2020 for income tax purposes) by Finance Act 2020 (c. 14), s. 29(5)(6) (with s. 29(7))Words in s. 270AA(2)(b)(i) inserted (retrospectively) by Finance Act 2020 (c. 14), Sch. 5 paras. 4, 10Words in s. 270AA(2)(b) inserted (1.4.2020 for corporation tax purposes and 6.4.2020 for income tax purposes) by Finance Act 2020 (c. 14), s. 29(2)(a)(6) (with s. 29(7))Word in s. 270EA(3)(a) substituted (1.4.2020 for corporation tax purposes and 6.4.2020 for income tax purposes) by Finance Act 2020 (c. 14), s. 29(3)(a)(6) (with s. 29(7))S. 270EA(3)(aa) inserted (1.4.2020 for corporation tax purposes and 6.4.2020 for income tax purposes) by Finance Act 2020 (c. 14), s. 29(3)(b)(6) (with s. 29(7))Word in s. 270IA(4)(a) omitted (retrospectively) by Finance Act 2020 (c. 14), Sch. 5 paras. 7, 10S. 270EC substituted (with effect in accordance with Sch. 5 para. 8 of the amending Act) by Finance Act 2020 (c. 14), Sch. 5 para. 2Words in s. 270BB(2)(a) substituted (retrospectively) by Finance Act 2020 (c. 14), Sch. 5 paras. 5, 10Words in s. 270BL substituted (retrospectively) by Finance Act 2020 (c. 14), Sch. 5 paras. 6, 10Pt. 2A Ch. 2A inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 10S. 270AA(2A) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 7(3)Words in s. 270AA(2)(b)(ii) substituted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 7(2)Words in s. 270AA(5) substituted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 7(4)Words in s. 270AA(6) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 7(5)S. 270BJ(2A) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 8Words in s. 270BK(3) substituted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 9S. 270EB(3A) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 11(3)Words in s. 270EB(2) substituted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 11(2)S. 270IA(5) inserted (10.6.2021) by Finance Act 2021 (c. 26), Sch. 22 para. 12Word in s. 270BNC heading inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 5(2)Words in s. 270BNC(1) renumbered as s. 270BNC(1)(a) (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 5(3)(a)S. 270BNC(1)(b) and word inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 5(3)(b)Words in s. 270BNC(4)(b) inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 5(4)S. 270BNC(5) inserted (24.2.2022) by Finance Act 2022 (c. 3), Sch. 16 para. 5(5)Word in s. 270IA(4)(b) substituted (with effect in accordance with s. 13(2) of the amending Act) by Finance Act 2022 (c. 3), s. 13(1)(a)S. 270IA(4)(d) and word inserted (with effect in accordance with s. 13(2) of the amending Act) by Finance Act 2022 (c. 3), s. 13(1)(b)Words in Pt. 2A Ch. 2A substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 23 para. 13(b)Words in Pt. 2A Ch. 2A substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 23 para. 14(b)Words in s. 270AA substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 23 para. 13(a)Words in s. 270BJ(2A) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 23 para. 14(a)Words in s. 270BNA(3)(b) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 332(3)(a)(i)(4)Words in s. 270BNA(4)(b) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 332(3)(a)(ii)(4)Words in s. 270BNB(3) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), s. 332(3)(b)(4)Words in s. 270IA(5) substituted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 23 para. 13(c)Word in s. 270IC cross-heading omitted (19.3.2025) by virtue of The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(2) (with reg. 63)Word in s. 270IC(1) omitted (19.3.2025) by virtue of The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(3) (with reg. 63)Word in s. 270IC(4) omitted (19.3.2025) by virtue of The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(3) (with reg. 63)S. 270ID(7A)(7B) inserted (19.3.2025) by The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(4)(b) (with reg. 63)Words in s. 270ID(1) inserted (19.3.2025) by The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(4)(a) (with reg. 63)Word in s. 270IE(1) omitted (19.3.2025) by virtue of The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(5) (with reg. 63)Word in s. 270IE(4) omitted (19.3.2025) by virtue of The Co-ownership Contractual Schemes (Tax) Regulations 2025 (S.I. 2025/200), regs. 1(2), 56(5) (with reg. 63)Word in s. 270HB heading omitted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by virtue of Finance Act 2025 (c. 8), Sch. 5 paras. 8(17)(a), 12(3) (with Sch. 5 paras. 15, 18, 19)Word in s. 270CA(b) substituted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 8(14)(a), 12(3) (with Sch. 5 paras. 15, 18, 19)Word in s. 270CA(c) omitted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by virtue of Finance Act 2025 (c. 8), Sch. 5 paras. 8(14)(b), 12(3) (with Sch. 5 paras. 15, 18, 19)S. 270CB omitted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by virtue of Finance Act 2025 (c. 8), Sch. 5 paras. 8(15), 12(3) (with Sch. 5 paras. 15, 18, 19)Words in s. 270CG(1) substituted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 8(16)(a), 12(3) (with Sch. 5 paras. 15, 18, 19)Words in s. 270CG(1) substituted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 8(16)(b), 12(3) (with Sch. 5 paras. 15, 18, 19)Word in s. 270HB(a) substituted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by Finance Act 2025 (c. 8), Sch. 5 paras. 8(17)(b), 12(3) (with Sch. 5 paras. 15, 18, 19)Word in s. 270HB(b) omitted (for the purposes of corporation tax, in relation to accounting periods beginning on or after 1.4.2025 and, for the purposes of income tax, in relation to periods of account beginning on or after 6.4.2025) by virtue of Finance Act 2025 (c. 8), Sch. 5 paras. 8(17)(c), 12(3) (with Sch. 5 paras. 15, 18, 19)