PART 1 U.K.Income tax, corporation tax and capital gains tax

Capital allowances: super-deductions etc U.K.

12 Disposal of assets where super-deduction made U.K.

(1) This section applies to plant or machinery in respect of which a person incurred super-deduction expenditure if a super-deduction was made in respect of some or all of that expenditure.

(2) Where a disposal event occurs in relation to plant or machinery to which this section applies, the person who incurred relevant super-deduction expenditure in respect of it is liable to a balancing charge for the chargeable period in which the event occurs (whether or not the person is also liable to any other balancing charge for that period).

(3) The amount of the balancing charge is, subject to subsection (6), the relevant proportion of the disposal value of the plant or machinery (see sections 61 to 63 of CAA 2001 which, among other provisions of Part 2 of that Act, contain provision about disposal values).

(4) The relevant proportion is determined by dividing the amount of relevant super-deduction expenditure incurred in respect of the plant or machinery by the amount of total relevant expenditure in relation to it.

(5) For the purposes of this section—

• super-deduction expenditure is “relevant” if a super-deduction was made in respect of it;

• “total relevant expenditure” in relation to plant or machinery means the sum of the following expenditure incurred in respect of it—

  (a)

  relevant super-deduction expenditure;

  (b)

  any expenditure in respect of which any other first-year allowance was made;

  (c)

  any expenditure that was allocated to a pool for any chargeable period (including for the period in which the disposal event occurs).

(6) If the disposal event occurs in a chargeable period that commenced before 1 April 2023 the amount of the balancing charge is the amount determined under subsection (3) multiplied by the relevant factor.

(7) The relevant factor is 1.3 if the chargeable period ends before 1 April 2023.

(8) If the chargeable period ends on or after 1 April 2023, the relevant factor is determined by—

(a) dividing the number of days in the period before 1 April 2023 by the total number of days in that period,

(b) multiplying that amount by 0.3, and

(c) adding 1 to the result.

(9) The balance of an amount of super-deduction expenditure in respect of which a super-deduction is made after deducting that super-deduction is to be treated as nil for the purposes of section 58(5)(b) and (6) of CAA 2001 (allocation of balance of first-year qualifying expenditure to a pool).

(10) In relation to the chargeable period in which the disposal event occurred, TDR (see section 55(1)(b) of CAA 2001) for the pool to which the relevant super-deduction expenditure was allocated is to be reduced by the relevant proportion of the disposal value of the plant or machinery.

(11) Section 135(1) of CAA 2001 (claim for deferment of balancing charges) does not apply in relation to a disposal event in respect of a ship to which this section applies.

(12) This section has effect in relation to disposals occurring on or after 1 April 2021.