Details of the Section
2.Subsection (1) explains that Part 2 of the Capital Allowances Act 2001 (CAA) has effect as if mention of the section appeared in section 39 and mention of the section and the 40 per cent rate appeared in the Table in section 52(3). This is because Part 2 will not actually be amended as the section is only a temporary measure but all the provisions in Part 2 are to apply for the temporary period as if it was a new section in Part 2.
3.Subsection (2) provides the conditions that the expenditure must meet in order to be first-year qualifying expenditure under this section. The conditions are that the expenditure is:
incurred in 2009-2010;
not within any of the standard general exclusions in section 46(2) of CAA (these include spending on cars and on assets for leasing);
not special rate expenditure (as defined in section 104A of CAA, which includes spending on long-life assets and integral features); and
not first-rate qualifying expenditure under any other provision in Chapter 4 of Part 2 of CAA.
4.Subsection (3) explains what is meant by the incurring of expenditure in 2009-2010.
5.Subsection (4) ensures that property lessors are not prohibited by the general exclusion on leased assets from claiming the temporary first–year allowance in respect of expenditure on background plant or machinery for a building (as defined in section 70R of CAA) provided that the expenditure is not special rate expenditure.
6.Subsection (6) provides that, in determining whether expenditure is incurred in 2009-10, any effect of section 12 of CAA is to be disregarded. Section 12 normally deems pre-commencement business expenditure to have been incurred on the first day when the business starts. Thus, if the pre-commencement expenditure were incurred before 1 April 2009 (for corporation tax) or 6 April 2009 (for income tax), but the business commences after those dates, this subsection would stop the pre-commencement expenditure from qualifying for the temporary first-year allowance.
