Search Legislation

Capital Allowances Act 2001

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes over time for: Chapter 4

 Help about opening options

Alternative versions:

Changes to legislation:

There are currently no known outstanding effects for the Capital Allowances Act 2001, Chapter 4. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

Chapter 4U.K. Qualifying expenditure: second-hand assets

Assets reflecting expenditure on mineral exploration and accessU.K.

407 Acquisition of mineral asset owned by previous traderU.K.

(1)This section applies if—

(a)a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring a mineral asset (“asset X”) for the purposes of that trade, and

(b)the conditions in subsection (3) are met.

(2)In this section “the buyer’s expenditure” means the expenditure referred to in subsection (1)(a), less any amount which, under section 404 (exclusion of undeveloped market value of land), is not qualifying expenditure on the acquisition of the mineral asset.

(3)The conditions are that—

(a)expenditure was previously incurred on acquiring asset X or bringing it into existence by—

(i)the person from whom the buyer acquired asset X, or

(ii)an earlier owner of asset X,

in connection with a mineral extraction trade carried on by the person incurring that expenditure,

(b)part of the value of asset X is properly attributable to expenditure (“E1”) on mineral exploration and access by the previous trader, and

(c)it is just and reasonable to attribute part of the buyer’s expenditure (“E2”) to that part of the value of asset X.

(4)In arriving at E1, any expenditure that is or has been deducted in calculating, for tax purposes, the profits of a trade carried on by the previous trader must be excluded.

(5)If this section applies—

(a)so much of the buyer’s expenditure as is equal to the lesser of E1 and E2 is to be treated as qualifying expenditure on mineral exploration and access, and

(b)the buyer’s expenditure on acquiring the mineral asset is reduced by the same amount.

(6)The previous trader” means—

(a)the person incurring the expenditure mentioned in subsection (3)(a), or

(b)if there has been more than one such person, the last before the buyer acquired asset X.

(7)In this section references to asset X include—

(a)two or more assets which together make up asset X, and

(b)one asset from which, or two or more assets from the combination of which, asset X is derived.

408 Acquisition of oil licence from non-traderU.K.

(1)This section applies if—

(a)a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring an interest in an oil licence for the purposes of that trade,

(b)the person from whom the interest was acquired (“the seller”) disposed of the interest without having carried on a mineral extraction trade,

(c)part of the value of the interest is attributable to expenditure (“E1”) on mineral exploration and access by the seller, and

(d)it is just and reasonable to attribute part of the buyer’s expenditure (“E2”) to that part of the value of the interest.

(2)If this section applies—

(a)so much of the buyer’s expenditure as is equal to the lesser of E1 and E2 is to be treated as qualifying expenditure on mineral exploration and access, and

(b)the buyer’s expenditure on acquiring the interest in the oil licence is reduced by an amount equal to E2.

(3)In this section “oil licence” and “interest in an oil licence” have the same meaning as in Chapter 3 of Part 12.

409 Acquisition of other assets from non-tradersU.K.

(1)This section applies if—

(a)a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring any assets for the purposes of that trade,

(b)the person from whom the assets were acquired (“the seller”) disposed of the assets without having carried on a mineral extraction trade,

(c)the assets represent expenditure on mineral exploration and access incurred by the seller, and

(d)section 408 (acquisition of oil licence from non-trader) does not apply in relation to the acquisition.

(2)If this section applies, the buyer’s expenditure is qualifying expenditure only to the extent that it does not exceed the amount of the seller’s expenditure on mineral exploration and access that is represented by the assets.

(3)The references in this section to assets representing expenditure on mineral exploration and access include any results obtained from any search, exploration or inquiry on which the expenditure was incurred.

Qualifying expenditure on assets limited by reference to historic costsU.K.

410 UK oil licence: limit is original licence paymentU.K.

(1)This section applies if a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring a mineral asset which is a UK oil licence, or an interest in such a licence, for the purposes of that trade.

(2)If this section applies, the buyer’s expenditure is qualifying expenditure only to the extent that it does not exceed—

(a)the original licence payment, or

(b)if the mineral asset is an interest in a UK oil licence, such part of the original licence payment as it is just and reasonable to attribute to the interest.

(3)In this section “the original licence payment” means the amount paid to the relevant authority for the purpose of obtaining the licence by the person to whom the licence was granted.

(4)This section does not affect any expenditure that is treated as qualifying expenditure on mineral exploration and access under—

  • section 407(5) (acquisition of mineral asset owned by previous trader), or

  • section 408(2) (acquisition of oil licence from non-trader).

(5)In this section “UK oil licence” and “the relevant authority” have the same meaning as in Chapter 3 of Part 12.

411 Assets generally: limit is residue of previous trader’s qualifying expenditureU.K.

(1)This section applies if—

(a)a person carrying on a mineral extraction trade (“the buyer”) incurs capital expenditure on acquiring an asset (“asset X”) for the purposes of that trade, and

(b)expenditure was previously incurred on acquiring asset X or bringing it into existence by—

(i)the person from whom the buyer acquired asset X, or

(ii)an earlier owner of asset X,

in connection with a mineral extraction trade carried on by the person incurring that expenditure.

(2)In this section “the buyer’s expenditure” means the expenditure referred to in subsection (1)(a) less any amount which, under section 404 (exclusion of undeveloped market value of land), is not qualifying expenditure on the acquisition of the mineral asset.

(3)If this section applies, the buyer’s expenditure is qualifying expenditure only to the extent that it does not exceed the residue of the previous trader’s qualifying expenditure.

(4)The residue of the previous trader’s qualifying expenditure is—

where—

QE is so much of the expenditure incurred by the previous trader on the acquisition or bringing into existence of asset X as constitutes qualifying expenditure for the purposes of this Part,

A is the total of any allowances made under this Part in respect of the previous trader’s qualifying expenditure, and

B is the total of any balancing charges made under this Part in respect of the previous trader’s qualifying expenditure.

(5)The previous trader” means—

(a)the person incurring the expenditure mentioned in subsection (1)(b), or

(b)if there has been more than one such person, the last before the buyer acquired asset X.

(6)In this section references to asset X include—

(a)two or more assets which together make up asset X, and

(b)one asset from which, or two or more assets from the combination of which, asset X is derived.

(7)For the purposes of subsection (4), if the previous trader incurred expenditure on the acquisition or bringing into existence of one or more assets from which asset X is derived, QE is so much of that expenditure as—

(a)was qualifying expenditure for the purposes of this Part, and

(b)is just and reasonable to attribute to asset X;

and a similar apportionment is to be made to arrive at A and B.

(8)This section does not affect any expenditure that is treated as qualifying expenditure on mineral exploration and access under—

  • section 407(5) (acquisition of mineral asset owned by previous trader), or

  • section 408(2) (acquisition of oil licence from non-trader).

412 Transfers of mineral assets within group: limit is initial group expenditureU.K.

(1)Subject to section 413, this section applies if—

(a)a company (“the buyer”) incurs capital expenditure on acquiring a mineral asset (“asset X”) from another company (“the seller”), and

(b)the seller is a group company in relation to the buyer at the time of the acquisition.

(2)The buyer’s expenditure on acquiring asset X is to be left out of account for the purposes of this Part to the extent that it exceeds—

(a)the capital expenditure incurred by the seller on acquiring asset X, or

(b)if asset X is an interest or right granted by the seller in a mineral asset acquired by the seller (“asset Y”), so much of the capital expenditure incurred by the seller on asset Y as on a just and reasonable apportionment is referable to asset X.

(3)If there is a sequence of acquisitions within subsection (1), apply subsection (2) in the same sequence (starting with the first acquisition in the sequence).

(4)Subsections (5) to (7) apply if—

(a)the buyer is carrying on a mineral extraction trade, and

(b)the asset is an interest in land.

(5)Section 404 (exclusion of undeveloped market value of land) applies to the buyer as if the time of the buyer’s acquisition of the interest in land were—

(a)the time of the seller’s acquisition of the interest, or

(b)if there is a sequence of acquisitions within subsection (1), the time when the interest was acquired by the company which is the seller in the first acquisition in the sequence.

(6)Subject to subsection (7), section 405 (qualifying expenditure where buildings or structures cease to be used) applies to the buyer as if the time of the buyer’s acquisition of the interest in land were the time of the seller’s acquisition of the interest.

(7)If there is a sequence of acquisitions within subsection (1), section 405 applies as if—

(a)the time of the acquisition were the time when the interest was acquired by the company which is the seller in the first acquisition in the sequence, but

(b)the allowances and balancing charges to be taken into account in calculating (under section 405(3)) the unrelieved value of the buildings or structures included any allowances or charges made to or on any seller in the sequence.

413 Transfers of mineral assets within group: supplementaryU.K.

(1)For the purposes of section 412, a company is a group company in relation to another company if—

(a)it controls, or is controlled by, the other company, or

(b)both companies are under the control of another person.

(2)Section 412 does not apply if—

(a)section 410 (UK oil licences: limit is original licence payment) applies to the acquisition, or

(b)the acquisition is a sale in respect of which an election is made under section 569 (election to treat sale as being for an alternative amount).

(3)Section 412 applies regardless of section 568 (sales between connected persons etc., or to obtain tax advantage, treated as at market value).

(4)Section 412 does not affect any expenditure that is treated as qualifying expenditure on mineral exploration and access under—

  • section 407(5) (acquisition of mineral asset owned by previous trader), or

  • section 408(2) (acquisition of oil licence from non-trader).

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act without Schedules as a PDF

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

Timeline of Changes

This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.

Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources