Part 5

Mineral extraction allowances
Chapter 1

Introduction

Mineral extraction allowances
394
1
Allowances are available under this Part if a person carries on a mineral extraction trade and incurs qualifying expenditure.
2
In this Part “mineral extraction trade” means a trade which consists of, or includes, the working of a source of mineral deposits but to the extent only that the profits or gains from that trade are, or (if there were any) would be, chargeable to tax.
2A
If a company or partnership is as a result of section 6D (
NI
rate activity treated as separate trade) treated for the purposes of this Act as carrying on two separate trades, each of them is for the purposes of this Part to be treated as a mineral extraction trade if the separate trades would together be so treated.
3
In this Part “mineral deposits” includes any natural deposits capable of being lifted or extracted from the earth, and for this purpose geothermal energy is to be treated as a natural deposit.
4
Any reference in this Part to mineral deposits is to mineral deposits of a wasting nature.
5
In this Part “source of mineral deposits” includes a mine, an oil well and a source of geothermal energy.

Qualifying expenditure
395
1
In this Part “qualifying expenditure” means—
a
expenditure on mineral exploration and access which is qualifying expenditure under Chapter 2,
b
expenditure on acquiring a mineral asset which is qualifying expenditure under Chapter 3,
c
expenditure which is treated as qualifying expenditure on mineral exploration and access under section 407(5) or 408(2), and
d
expenditure which is qualifying expenditure under Chapter 5 (expenditure on works likely to become valueless and ... restoration expenditure).
But this is subject to subsections (2) and (3).
2
Expenditure is not qualifying expenditure if it is excluded from being qualifying expenditure by section 399.
3
Chapters 4 and 5 contain provisions limiting in certain cases the amount of expenditure which is qualifying expenditure.

Meaning of “mineral exploration and access”
396
1
In this Part “mineral exploration and access” means—
a
searching for or discovering and testing the mineral deposits of a source, or
b
winning access to such deposits.
2
Expenditure on seeking planning permission necessary to enable—
a
mineral exploration and access to be undertaken at any place, or
b
any mineral deposits to be worked,
is treated as expenditure on mineral exploration and access and not as expenditure on acquiring a mineral asset.
3
“Seeking planning permission” includes pursuing an appeal against a refusal to grant planning permission.

Meaning of “mineral asset”
397
In this Part “mineral asset” means—
a
any mineral deposits or land comprising mineral deposits, or
b
any interest in or right over such deposits or land.

Relationship between main types of qualifying expenditure
398
Subject to section 396(2) and Chapter 4, expenditure on—
a
the acquisition of, or of rights over, the site of a source of mineral deposits, or
b
the acquisition of, or of rights over, mineral deposits,
is to be treated as expenditure on acquiring a mineral asset and not as expenditure on mineral exploration and access.

Expenditure excluded from being qualifying expenditure
399
1
Expenditure on the provision of plant or machinery is not qualifying expenditure except as provided by section 402 (pre-trading expenditure on plant or machinery).
1A
Expenditure incurred by a person for the purposes of a mineral extraction trade is not qualifying expenditure if—
a
when the expenditure is incurred, the person is carrying on the trade but the trade is not at that time a mineral extraction trade, or
b
the person has not begun to carry on the trade when the expenditure is incurred and, when the person begins to carry on the trade, the trade is not a mineral extraction trade.
1B
Section 577(2) (references to commencement
etc
of a trade) does not apply to subsection (1A).
2
Expenditure on works constructed wholly or mainly for subjecting the raw product of a source to any process is not qualifying expenditure, unless the process is designed for preparing the raw product for use as such.
3
Expenditure on buildings or structures provided for occupation by, or for the welfare of, workers is not qualifying expenditure except as provided by section 415.
4
Expenditure on a building is not qualifying expenditure if the whole of the building was constructed for use as an office.
5
Subsection (6) applies if part of a building or structure has been constructed for use as an office.
6
The expenditure on the office part is not qualifying expenditure if it was more than 10% of the capital expenditure incurred on the construction of the whole.
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
Word in s. 395(1)(d) omitted (with effect in accordance with s. 92(10) of the amending Act) by virtue of Finance Act 2013 (c. 29), s. 92(2)
Words in s. 395(3) substituted (with effect in accordance with Sch. 32 para. 11 of the amending Act) by Finance Act 2013 (c. 29), Sch. 32 para. 10
Words in s. 394(2) inserted (with effect in accordance with s. 67(8) of the amending Act) by Finance Act 2014 (c. 26), s. 67(2)
Words in s. 396(2) substituted (with effect in accordance with s. 68(4) of the amending Act) by Finance Act 2014 (c. 26), s. 68(2)
Words in s. 398 inserted (with effect in accordance with s. 68(4) of the amending Act) by Finance Act 2014 (c. 26), s. 68(3)
S. 399(1A)(1B) inserted (with effect in accordance with s. 67(8) of the amending Act) by Finance Act 2014 (c. 26), s. 67(3)
S. 394(2A) inserted (with effect in accordance with s. 5 of the amending Act) by Corporation Tax (Northern Ireland) Act 2015 (c. 21), Sch. 1 para. 12