Part 2

Plant and machinery allowances
Chapter 20

Supplementary provisions

Partnerships and successions

Qualifying activities carried on in partnership
263
1
This section applies if—
a
a qualifying activity has been set up and is at any time carried on in partnership,
b
there has been a change in the persons engaged in carrying on the qualifying activity, and
c
if the qualifying activity is a trade or property business, the condition in subsection (1A) or (1B) (whichever is appropriate) is met.
1A
For income tax purposes, the condition is that a person carrying on the trade or property business immediately before the change continues to carry it on after the change.
1B
For corporation tax purposes, the condition is that a company carrying on the trade or property business in partnership immediately before the change continues to carry it on in partnership after the change.
2
In this section—
- “the present partners” means the person or persons for the time being carrying on the qualifying activity,
- “the partners at the time of the event” means the person or persons carrying on the qualifying activity at the time of the event in question,
- “predecessors”—
  1. in relation to the present partners, means their predecessors in carrying on the qualifying activity, and
  2. in relation to the partners at the time of the event, means their predecessors in carrying on the qualifying activity, and
- “qualifying activity”—
  1. does not include an employment or office, but
  2. includes any other activity listed in section 15(1) even if any profits or gains from it are not chargeable to tax.
3
Any annual investment allowance, first-year allowance or writing-down allowance under this Part is to be made to the present partners.
4
The amount of any allowance arising under subsection (3) is to be calculated as if—
a
the present partners had at all times been carrying on the qualifying activity, and
b
everything done to or by their predecessors in carrying on the qualifying activity had been done to or by the present partners.
5
If any event occurs which gives rise or may give rise to a balancing allowance or a balancing charge under this Part, the allowance or charge is to be made to or on the partners at the time of the event.
6
The amount of any allowance or charge arising under subsection (5) is to be calculated as if—
a
the partners at the time of the event had at all times been carrying on the qualifying activity, and
b
everything done to or by their predecessors in carrying on the qualifying activity had been done to or by the partners at the time of the event.
Pt. 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)
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. 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
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
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
Words in s. 263(3) inserted (with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 13
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
S. 263(1)(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. 495(2) (with Sch. 2 Pts. 1, 2)
S. 263(1A)(1B) substituted for s. 263(1A) (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. 495(3) (with Sch. 2 Pts. 1, 2)
Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)