Legalize / United Kingdom / Public General Act

Capital Allowances Act 2001

Type Public General Act

Publication 2001-03-22

Last updated 2026-03-18

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

Section 87 (taxable premiums etc.)

Section 91 (cemeteries)

Section 116 (arrangements for transferring relief)

Section 359 (loan to buy machinery or plant)

Other definitions

Transfer of a UK trade to a company in another member State

Schedule 21 (tax relief in connection with schemes for rationalising industry and other redundancy schemes)

Schedule 24 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies)

The writing-down period

Meaning of “chargeable period”

Expenditure on plant and machinery for use wholly in a ring fence trade

Employments and offices

Miscellaneous exclusions from section 40 (expenditure for Northern Ireland purposes etc.)

Effect of plant or machinery subsequently being primarily for use outside Northern Ireland

SME partnership entering NI corporation tax regime

Application of Chapter to part of expenditure

Rental rebate

Disposal values in avoidance cases

Additional VAT liabilities and writing off initial allowances

General rule as to what is the relevant interest

Expenditure on research and development

Trades

Transfer or division of UK business

Limit on amount of disposal value

Apportionment of sums partly referable to non-qualifying assets

Section 42 (relief for production or acquisition expenditure)

Section 43 (interpretation of sections 41 and 42)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Commencement and transitional provisions and savings

Section 98 (special returns, etc.)

Section 137 (expenditure met by regional development plans to be disregarded for certain purposes)

Schedule 1 (certification of films as British films)

Schedule 2 (taxation)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 24 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies)

Schedule 25 (Northern Ireland Airports Limited)

Section 87 (taxable premiums etc.)

Schedule 25 (Northern Ireland Airports Limited)

Schedule 2 (levy of Class 4 contributions with income tax)

New sections 40A to 40D (films)

Section 42 (relief for production or acquisition expenditure)

Section 43 (interpretation of sections 41 and 42)

Schedule 17 (Northern Ireland electricity)

Additional VAT rebates and writing off qualifying expenditure

Consequential amendments

Section 42 (procedure for making claims etc.)

Schedule 2 (taxation)

Schedule 33 (taxation)

Section 126 (pools payments for football ground improvements)

Schedule 11 (taxation provisions)

Schedule 2 (levy of Class 4 contributions with income tax)

“Additional VAT liability” and “additional VAT rebate”

Section 288 (interpretation)

Section 43 (interpretation of sections 41 and 42)

Schedule 17 (Northern Ireland electricity)

Section 151 (benefits under pilot schemes)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Transfer or division of UK business

Section 828 (orders and regulations made by the Treasury or the Board)

Section 151 (benefits under pilot schemes)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Elections: supplementary

Schedule 2 (levy of Class 4 contributions with income tax)

Equipment lease is part of affordable warmth programme

Section 116 (arrangements for transferring relief)

Meaning of “connected” persons

Election to treat sale as being for alternative amount

Long-life asset expenditure

Election to treat sale as being for alternative amount

Consequential amendments

Section 92 (the basic rule: sterling to be used)

Schedule 3 (taxation provisions)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 24 (provisions relating to the Railways Act 1993)

Avoidance affecting proceeds of balancing event

Meaning of “qualifying flat”

Calculation of balancing adjustments

Effect of successions

Application of Act to parts of assets

Lessor’s income or profits: termination of leaseback

Grants affecting entitlement to allowances

Election to treat sale as being for alternative amount

Part 3A — Business Premises Renovation Allowances

Chapter 1 — INTRODUCTION

360A

(1) Allowances are available under this Part if a person incurs qualifying expenditure in respect of a qualifying building.

(2) Allowances under this Part are made to the person who—

(a) incurred the expenditure, and

(b) has the relevant interest in the qualifying building.

Chapter 2 — QUALIFYING EXPENDITURE

360B

(1) In this Part “qualifying expenditure” means capital expenditure incurred before the expiry date—

(a) in respect of which Conditions A and B are met, and

(b) which is not excluded by subsection (3), (3B) or (3D).

(2) In subsection (1) “ the expiry date ” means—

(a) the fifth anniversary of the day appointed under section 92 of FA 2005, or

(b) such later date as the Treasury may prescribe by regulations.

(2A) Condition A is that the expenditure is incurred on—

(a) the conversion of a qualifying building into qualifying business premises,

(b) the renovation of a qualifying building if it is or will be qualifying business premises, or

(c) repairs to a qualifying building or, where the building is part of a building, to the building of which the qualifying building forms part, to the extent that the repairs are incidental to expenditure within paragraph (a) or (b).

(2B) Condition B is that the expenditure is incurred on—

(a) building works,

(b) architectural or design services,

(d) planning applications, or

(e) statutory fees or statutory permissions.

(2C) But Condition B is treated as met in respect of expenditure incurred on matters not mentioned in that Condition to the extent that that expenditure (in total) does not exceed 5% of the qualifying expenditure incurred on the matters mentioned in subsection (2B)(a) to (c).

(3) Expenditure is excluded if it is incurred on or in connection with—

(a) the acquisition of land or rights in or over land,

(b) the extension of a qualifying building (except to the extent required for the purpose of providing a means of getting to or from qualifying business premises),

(d) the provision of plant and machinery, other than plant or machinery which is or becomes a fixture (as defined by section 173(1)) and falls within subsection (3A).

(3A) The fixtures which fall within this subsection are—

(a) integral features within the meaning of section 33A (taking account of section 33A(6) and any provision for the time being made under section 33A(7)) or part of such a feature;

(b) automatic control systems for opening and closing doors, windows and vents;

(d) fitted cupboards and blinds;

(e) protective installations such as lightning protection, sprinkler and other equipment for containing or fighting fires, fire alarm systems and fire escapes;

(f) building management systems;

(g) cabling in connection with telephone, audio-visual data installations and computer networking facilities, which are incidental to the occupation of the building;

(h) sanitary appliances, and bathroom fittings which are hand driers, counters, partitions, mirrors or shower facilities;

(i) kitchen and catering facilities for producing and storing food and drink for the occupants of the building;

(j) signs;

(k) public address systems;

(l) intruder alarm systems.

(3B) Expenditure is excluded if, and to the extent that, it exceeds the market value amount for the works, services or other matters to which it relates.

(3C) “The market value amount” means the amount of expenditure which it would have been normal and reasonable to incur on the works, services or other matters—

(a) in the market conditions prevailing when the expenditure was incurred, and

(b) assuming the transaction as a result of which the expenditure was incurred was between persons dealing with each other at arm's length in the open market.

(3D) Expenditure is excluded if the qualifying building was used at any time during the period of 12 months ending with the day on which the expenditure is incurred.

(4) For the purposes of this section, expenditure incurred on repairs to a building is to be treated as capital expenditure if it is not expenditure that would be allowed to be deducted in calculating the profits of a property business, or of a trade, profession or vocation, for tax purposes.

(5) The Treasury may by regulations —

(a) amend this section so as to add a description of fixture to the list in subsection (3A), or vary or remove a description of fixture in that list;

(b) make further provision as to expenditure which is, or is not, qualifying expenditure.

Chapter 3 — QUALIFYING BUILDINGS AND QUALIFYING BUSINESS PREMISES

360C

(1) In this Part “ qualifying building ”, in relation to any conversion or renovation work, means any building or structure, or part of a building or structure, which—

(a) is situated in an area which, on the date on which the conversion or renovation work began, was a disadvantaged area,

(b) was unused throughout the period of one year ending immediately before that date,

(i) for the purposes of a trade, profession or vocation, or

(ii) as an office or offices (whether or not for the purposes of a trade, profession or vocation),

(d) on that date, had not last been used as, or as part of, a dwelling, and

(e) in the case of part of a building or structure, on that date had not last been occupied and used in common with any other part of the building or structure other than a part—

(i) as respects which the condition in paragraph (b) is met, or

(ii) which had last been used as a dwelling.

(2) In this section “ disadvantaged area ” means—

(a) an area designated as a disadvantaged area for the purposes of this section by regulations made by the Treasury, ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Regulations under subsection (2)(a) may—

(a) designate specified areas as disadvantaged areas, or

(b) provide for areas of a description specified in the regulations to be designated as disadvantaged areas.

(4) If regulations under subsection (2)(a) so provide, the designation of an area as a disadvantaged area shall have effect for such period as may be specified in or determined in accordance with the regulations.

(5) Regulations under subsection (2)(a) may—

(a) make different provision for different cases, and

(b) contain such incidental, supplementary, consequential or transitional provision as appears to the Treasury to be necessary or expedient.

(6) Where a building or structure (or part of a building or structure) which would otherwise be a qualifying building is on the date mentioned in subsection (1)(a) situated partly in a disadvantaged area and partly outside it, only so much of the expenditure incurred in accordance with section 360B as, on a just and reasonable apportionment, is attributable to the part of the building or structure located in the disadvantaged area is to be treated as qualifying expenditure.

(7) The Treasury may by regulations make further provision as to the circumstances in which a building or structure or part of a building or structure is, or is not, a qualifying building.

360D

(1) In this Part “ qualifying business premises ” means any premises in respect of which the following requirements are met—

(a) the premises must be a qualifying building,

(b) the premises must be used, or available and suitable for letting for use,—

(i) for the purposes of a trade, profession or vocation, or

(ii) as an office or offices (whether or not for the purposes of a trade, profession or vocation),

(2) In this section “ premises ” means any building or structure or part of a building or structure.

(3) For the purposes of this Part, if premises are qualifying business premises immediately before a period when they are temporarily unsuitable for use for the purposes mentioned in subsection (1)(b), they are to be treated as being qualifying business premises during that period.

(4) The Treasury may by regulations make further provision as to the circumstances in which premises are, or are not, qualifying business premises.

Chapter 4 — THE RELEVANT INTEREST IN THE QUALIFYING BUILDING

360E

(1) The relevant interest in a qualifying building in relation to any qualifying expenditure is the interest in the qualifying building to which the person who incurred the qualifying expenditure was entitled when it was incurred.

(2) Subsection (1) is subject to the following provisions of this Chapter and to section 360Z3 (provisions applying on termination of lease).

(3) If—

(a) the person who incurred the qualifying expenditure was entitled to more than one interest in the qualifying building when the expenditure was incurred, and

(b) one of those interests was reversionary on all the others,

the reversionary interest is the relevant interest in the qualifying building.

(4) An interest does not cease to be the relevant interest merely because of the creation of a lease or other interest to which that interest is subject.

(5) If—

(a) the relevant interest is a leasehold interest, and

(b) that interest is extinguished on the person entitled to it acquiring the interest which is reversionary on it,

the interest into which the leasehold interest merges becomes the relevant interest when the leasehold interest is extinguished.

360F

For the purposes of determining the relevant interest in a qualifying building, a person who—

(a) incurs expenditure on the conversion of a qualifying building into qualifying business premises, and

(b) is entitled to an interest in the qualifying building on or as a result of the completion of the conversion,

is treated as having had that interest when the expenditure was incurred.

Chapter 5 — INITIAL ALLOWANCES

360G

(1) A person who has incurred qualifying expenditure in respect of any qualifying building is entitled to an initial allowance in respect of the expenditure.

(2) The amount of the initial allowance is 100% of the qualifying expenditure.

(3) A person claiming an initial allowance under this section may require the allowance to be reduced to a specified amount.

(4) The initial allowance is made for the chargeable period in which the qualifying expenditure is incurred.

360H

(1) No initial allowance is to be made under section 360G if, at the relevant time, the qualifying building does not constitute qualifying business premises.

(2) An initial allowance which has been made in respect of a qualifying building which is to be qualifying business premises is to be withdrawn if—

(a) the qualifying building does not constitute qualifying business premises at the relevant time, or

(b) the person to whom the allowance was made has sold the relevant interest in the qualifying building before the relevant time.

(3) All such assessments and adjustments of assessments are to be made as are necessary to give effect to this section.

(4) In this section “ the relevant time ” means the time when the premises are first used by the person with the relevant interest or, if they are not so used, the time when they are first suitable for letting for either of the purposes mentioned in section 360D(1)(b).

Chapter 6 — WRITING-DOWN ALLOWANCES

360I

(1) A person is entitled to a writing-down allowance for a chargeable period if he has incurred qualifying expenditure in respect of a qualifying building and, at the end of the chargeable period—

(a) the person is entitled to the relevant interest in the qualifying building,

(b) the person has not granted a long lease of the qualifying building out of the relevant interest in consideration of the payment of a capital sum, and

(2) In subsection (1)(b) “ long lease ” means a lease the duration of which exceeds 50 years.

(3) Whether the duration of a lease exceeds 50 years is to be determined—

(a) in accordance with section 303 of ITTOIA 2005, and

(b) without regard to section 360Z3(3) of this Act (new lease granted as a result of the exercise of an option treated as continuation of old lease).

(4) A person claiming a writing-down allowance may require the allowance to be reduced to a specified amount.

360J

(1) The writing-down allowance for a chargeable period is 25% of the qualifying expenditure.

(2) The allowance is proportionately increased or reduced if the chargeable period is more or less than a year.

(3) The amount of the writing-down allowance for a chargeable period is limited to the residue of qualifying expenditure.

(4) For this purpose the residue is ascertained immediately before writing off the writing-down allowance at the end of the chargeable period.

360K

The residue of qualifying expenditure is the qualifying expenditure that has not yet been written off in accordance with Chapter 9.

Chapter 7 — GRANTS IN RESPECT OF QUALIFYING EXPENDITURE

360L

(1) No initial allowance or writing-down allowance under this Part is to be made in respect of qualifying expenditure in respect of a qualifying building if a relevant grant or relevant payment is made towards—

(a) that expenditure, or

(b) any other expenditure which is incurred by any person in respect of the same building, and on the same single investment project as that expenditure.

(2) An initial allowance or writing-down allowance made in respect of qualifying expenditure is to be withdrawn if—

(a) after it is made, a relevant grant or relevant payment is made towards that expenditure, or

(b) within the period of 3 years beginning when that expenditure was incurred, a relevant grant or relevant payment is made towards any other expenditure which is incurred by any person in respect of the same building, and on the same single investment project, as that expenditure.

(3) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (2).

(4) If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(5) The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(6) In this section—

“General Block Exemption Regulation” means Commission Regulation (EU) No 651/2014 (General block exemption Regulation) as it had effect in the United Kingdom immediately before IP completion day;

“relevant grant or relevant payment” means a grant or payment which is—a State aid, other than an allowance under this Part, ora grant or subsidy, other than a State aid, which the Treasury by order declares to be relevant for the purposes of the withholding of allowances under this Part;

“single investment project” has the same meaning as in the General Block Exemption Regulation.

(7) Nothing in this section limits references to “State aid” to State aid which is required to be notified to and approved by the European Commission.

(8) The Treasury may by order amend this section to make provision consequential upon the General Block Exemption Regulation being replaced by another instrument.

Chapter 8 — BALANCING ADJUSTMENTS

360M

(1) A balancing adjustment is made if—

(a) qualifying expenditure has been incurred in respect of a qualifying building, and

(b) a balancing event occurs.

(2) A balancing adjustment is either a balancing allowance or a balancing charge and is made for the chargeable period in which the balancing event occurs.

(3) A balancing allowance or balancing charge is made to or on the person who incurred the qualifying expenditure.

(4) No balancing adjustment is made if the balancing event occurs more than 5 years after the time when the premises were first used, or suitable for letting, for either of the purposes mentioned in section 360D(1)(b).

(5) If more than one balancing event within section 360N occurs, a balancing adjustment is made only on the first of them.

360N

(1) The following are balancing events for the purposes of this Part—

(a) the relevant interest in the qualifying building is sold;

(b) a long lease of the qualifying building is granted out of the relevant interest in consideration of the payment of a capital sum;

(c) if the relevant interest is a lease, the lease ends otherwise than on the person entitled to it acquiring the interest reversionary on it;

(d) the person who incurred the qualifying expenditure dies;

(e) the qualifying building is demolished or destroyed;

(f) the qualifying building ceases to be qualifying business premises (without being demolished or destroyed).

(2) Section 360I(2) and (3) (meaning of “long lease”) applies for the purposes of subsection (1)(b).

360O

(1) References in this Part to the proceeds from a balancing event are to the amounts received or receivable in connection with the event, as shown in the Table—

1 Balancing Event	2 Proceeds from event
1 The sale of the relevant interest.	The net proceeds of the sale.
2 The grant of a long lease out of the relevant interest.	If the capital sum paid in consideration of the grant is less than the commercial premium, the commercial premium.In any other case, the capital sum paid in consideration of the grant.
3 The coming to an end of a lease, where a person entitled to the lease and a person entitled to any superior interest are connected persons.	The market value of the relevant interest in the qualifying building at the time of the event.
4 The death of the person who incurred the qualifying expenditure.	The residue of qualifying expenditure immediately before the death.
5 The demolition or destruction of the qualifying building.	The net amount received for the remains of the qualifying building, together with any insurance money received in respect of the demolition or destruction, and any other compensation of any description so received, so far as it consists of capital sums.
6 The qualifying building ceases to be qualifying business premises.	The market value of the relevant interest in the qualifying building at the time of the event.

(2) The amounts referred to in column 2 of the Table are those received or receivable by the person who incurred the qualifying expenditure.

(3) In Item 2 of the Table “ the commercial premium ” means the premium that would have been given if the transaction had been at arm's length.

360P

(1) A balancing allowance is made if—

(a) there are no proceeds from the balancing event, or

(b) the proceeds from the balancing event are less than the residue of qualifying expenditure immediately before the event.

(2) The amount of the balancing allowance is the amount of—

(a) the residue (if there are no proceeds);

(b) the difference (if the proceeds are less than the residue).

(3) A balancing charge is made if the proceeds from the balancing event are more than the residue, if any, of qualifying expenditure immediately before the event.

(4) The amount of the balancing charge is the amount of—

(a) the difference, or

(b) the proceeds (if the residue is nil).

(5) The amount of a balancing charge made on a person must not exceed the total amount of—

(a) any initial allowances made to the person in respect of the expenditure, and

(b) any writing-down allowances made to the person in respect of the expenditure for chargeable periods ending on or before the date of the balancing event giving rise to the balancing adjustment.

Chapter 9 — WRITING OFF QUALIFYING EXPENDITURE

360Q

For the purposes of this Part qualifying expenditure is written off to the extent and at the times specified in this Chapter.

360R

(1) If an initial allowance is made in respect of the qualifying expenditure, the amount of the allowance is written off at the time when the qualifying business premises are first used, or suitable for letting for use, for either of the purposes mentioned in section 360D(1)(b).

(2) If a writing-down allowance is made in respect of the qualifying expenditure, the amount of the allowance is written off at the end of the chargeable period for which the allowance is made.

(3) If a balancing event occurs at the end of the chargeable period referred to in subsection (2), the amount written off under that subsection is to be taken into account in calculating the residue of qualifying expenditure immediately before the event to determine what balancing adjustment (if any) is to be made.

360S

(1) This section applies if—

(a) a qualifying building is demolished, and

(b) the person who incurred the qualifying expenditure incurs the cost of the demolition.

(2) The net cost of the demolition is added to the residue of qualifying expenditure immediately before the demolition.

(3) “ The net cost of the demolition ” means the amount, if any, by which the cost of the demolition exceeds any money received for the remains of the qualifying building.

(4) If this section applies, neither the cost of the demolition nor the net cost of the demolition is treated for the purposes of any Part of this Act as expenditure on any other property replacing the qualifying building demolished.

Chapter 10 — ADDITIONAL VAT LIABILITIES AND REBATES

360T

For the purposes of this Chapter—

(a) “ additional VAT liability ” and “ additional VAT rebate ” have the meanings given by section 547,

(b) the time when—

(i) a person incurs an additional VAT liability, or

(ii) an additional VAT rebate is made to a person,

is given by section 548, and

(c) the chargeable period in which, and the time when, an additional VAT liability or an additional VAT rebate accrues are given by section 549.

360U

(1) This section applies if—

(a) a person was entitled to an initial allowance under this Part in respect of qualifying expenditure on a qualifying building,

(b) that person incurs an additional VAT liability in respect of that expenditure, and

(c) the additional VAT liability is incurred at a time when the qualifying building is, or is about to be, qualifying business premises.

(2) If this section applies, the person entitled to the relevant interest is entitled to an initial allowance on the amount of the additional VAT liability.

(3) The amount of the initial allowance is 100% of the amount of the additional VAT liability.

(4) A person claiming an initial allowance under this section may require the allowance to be reduced to a specified amount.

(5) The allowance is made for the chargeable period in which the additional VAT liability accrues.

360V

(1) This section applies if the person entitled to the relevant interest in relation to qualifying expenditure incurs an additional VAT liability in respect of that expenditure.

(2) If this section applies—

(a) the additional VAT liability is treated as qualifying expenditure, and

(b) the amount of the residue of qualifying expenditure is accordingly increased at the time when the liability accrues by the amount of the liability.

360W

If an initial allowance is made in respect of an additional VAT liability incurred after the qualifying business premises are first used or suitable for letting for business use, the amount of the allowance is written off at the time when the liability accrues.

360X

(1) If an additional VAT rebate is made in respect of qualifying expenditure to the person entitled to the relevant interest in relation to that qualifying expenditure—

(a) the making of the rebate is a balancing event for the purposes of this Part, but

(b) the making of balancing adjustments as a result of the event is subject to subsections (2) and (3).

(2) No balancing allowance is to be made as a result of the event.

(3) A balancing charge is not to be made as a result of the event unless—

(a) the amount of the additional VAT rebate is more than the amount of the residue of qualifying expenditure immediately before the time when the rebate accrues, or

(b) there is no such residue.

(4) The amount of the balancing charge is—

(a) the amount of the difference, or

(b) the amount of the rebate (if there is no residue).

360Y

If an additional VAT rebate is made in respect of qualifying expenditure, an amount equal to the rebate is written off at the time when the rebate accrues.

Chapter 11 — SUPPLEMENTARY PROVISIONS

360Z

(1) An allowance or charge to which a person is entitled or liable under this Part is to be given effect in calculating the profits of that person's trade, by treating—

(a) the allowance as an expense of the trade, and

(b) the charge as a receipt of the trade.

(2) In the case of a person who—

(a) is entitled to an allowance or liable to a charge in respect of a qualifying building, and

(b) occupies that building in the course of a profession or vocation,

the references in subsection (1) to a trade are to be read as references to the profession or vocation.

(3) Subsection (1) is subject to—

(a) section 6E (giving effect to allowances and charges: NI rate activity cases), and

(b) the following provisions of this Chapter.

(4) 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, the question of whether an allowance or charge relates to the NI rate activity or the main rate activity is to be determined by reference to the purposes for which the qualifying building is used.

(5) If the qualifying building is used both for the purposes of the NI rate activity and for the purposes of the main rate activity, allowances and charges are to be apportioned on a just and reasonable basis between the trade consisting of the NI rate activity and the trade consisting of the main rate activity, according to the proportion of use for the purposes of the NI rate activity.

(6) In this section “main rate activity” means an activity other than an NI rate activity.

360Z1

(1) This section applies if—

(a) a person is entitled or liable to an allowance or charge under this Part for a chargeable period (“ the relevant period ”), but

(b) his interest in the building in question is or was subject to a lease or a licence at any time in that period.

(2) If the person's interest in the building is an asset of a property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect in calculating the profits of that business for the relevant period by treating—

(a) the allowance as an expense of that business, and

(b) the charge as a receipt of that business.

(3) If the person's interest in the building is not an asset of a property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect by treating him as if he had been carrying on a property business in that period and as if—

(a) the allowance were an expense of that business, and

(b) the charge were a receipt of that business.

360Z2

(1) If the sum paid for the sale of the relevant interest in a qualifying building is attributable—

(a) partly to assets representing expenditure for which an allowance can be made under this Part, and

(b) partly to assets representing other expenditure,

only so much of the sum as on a just and reasonable apportionment is attributable to the assets referred to in paragraph (a) is to be taken into account for the purposes of this Part.

(2) Subsection (1) applies to other proceeds from a balancing event in respect of a qualifying building as it applies to a sum given for the sale of the relevant interest in the qualifying building.

(3) Subsection (1) does not affect any other provision of this Act requiring an apportionment of the proceeds of a balancing event.

360Z3

(1) This section applies for the purposes of this Part if a lease is terminated.

(2) If, with the consent of the lessor, the lessee of the qualifying building remains in possession of the qualifying building after the termination without a new lease being granted to him, the lease is treated as continuing so long as the lessee remains in possession.

(3) If on the termination a new lease is granted to a lessee as a result of the exercise of an option available to him under the terms of the first lease, the second lease is treated as a continuation of the first.

(4) If on the termination the lessor pays a sum to the lessee in respect of business premises comprised in the lease, the lease is treated as if it had come to an end by surrender in consideration of the payment.

(5) If on the termination—

(a) another lease is granted to a different lessee, and

(b) in connection with the transaction that lessee pays a sum to the person who was the lessee under the first lease,

the two leases are to be treated as if they were the same lease which had been assigned by the lessee under the first lease to the lessee under the second lease in consideration of the payment.

360Z4

(1) In this Part “ lease ” includes—

(a) an agreement for a lease if the term to be covered by the lease has begun, and

(b) any tenancy,

but does not include a mortgage (and “ lessee ”, “ lessor ” and “ leasehold interest ” are to be read accordingly).

(2) In the application of this Part to Scotland—

(a) “ leasehold interest ” or “ leasehold estate ” means the interest of a tenant in property subject to a lease, and

(b) any reference to an interest which is reversionary on a leasehold interest or on a lease is to be read as a reference to the interest of the landlord in the property subject to the leasehold interest or lease.

High value flats

General rule as to what is the relevant interest

Section 98 (special returns, etc.)

Schedule 2 (taxation)

Schedule 4 (taxation provisions)

Meaning of “qualifying expenditure”

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 1 (certification of films as British films)

Section 105 (corporation tax: use of currencies other than sterling)

Apportionment of sums partly referable to non-qualifying assets

Schedule 17 (Northern Ireland electricity)

Section 43 (interpretation of sections 41 and 42)

Section 43C (transfer of rent: exceptions, etc.)

Schedule 3 (taxation provisions)

Section 93 (use of currency other than sterling)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Section 384 (restrictions on right of set-off)

Section 288 (interpretation)

Section 43 (interpretation of sections 41 and 42)

Investment assets

Section 359 (loan to buy machinery or plant)

Section 105 (corporation tax: use of currencies other than sterling)

Meaning of “dwelling-house”, “lease” etc.

Research and development allowances

Section 379A (Schedule A losses)

Section 105 (corporation tax: use of currencies other than sterling)

Equipment lessor has right to sever fixture that is not part of building

Purchaser of land giving consideration for fixture

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

The writing-down period

Use for qualifying activity of plant or machinery which is a gift

Equipment lessor has right to sever fixture that is not part of building

Avoidance affecting proceeds of balancing event

Schedule 21 (tax relief in connection with schemes for rationalising industry and other redundancy schemes)

Schedule 24 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies)

Schedule 28A (change in ownership of investment company: deductions)

Schedule 26 (transfers: tax)

Use for qualifying activity of plant or machinery which is a gift

Purchaser of land giving consideration for fixture

Tax agreements for income tax purposes

The writing-down period

Schedule 25 (Northern Ireland Airports Limited)

Schedule 4 (taxation provisions)

Section 379A (Schedule A losses)

New section 384A (restriction of set-off of plant and machinery allowances)

Section 86 (spreading of relief for acquisition expenses)

Avoidance affecting proceeds of balancing event

Schedule 25 (Northern Ireland Airports Limited)

Schedule 12 (leasing arrangements: finance leases and loans)

Questions to which procedure in section 563 applies

Section 151 (benefits under pilot schemes)

Election to treat sale as being for alternative amount

Section 43 (interpretation of sections 41 and 42)

Section 492 (treatment of oil extraction activities etc. for tax purposes)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 24 (provisions relating to the Railways Act 1993)

Sections 520 to 523 (patents)

Section 528 (patents: manner of making allowances and charges)

Section 575: supplementary

Schedule 19AC (modification of Act in relation to overseas life insurance companies)

Section 42 (relief for production or acquisition expenditure)

Schedule 28AA (provision not at arms’ length)

Schedule 4 (taxation provisions)

Schedule 11 (taxation provisions)

Schedule 3 (rules for assigning proceedings to General Commissioners)

Section 126 (pools payments for football ground improvements)

Section 65 (reimbursement by defaulter in respect of certain abandonment expenditure)

Schedule 1 (certification of films as British films)

Expenditure on plant and machinery for use wholly in a ring fence trade

Cases where allowances are prohibited

Additional VAT liabilities and initial allowances

Meaning of “qualifying building”

The overseas leasing pool

Provisions applying on termination of lease

Tax agreements for income tax purposes

Giving effect to allowances and charges

Transfer or division of UK business

Meaning of “connected” persons

Other definitions

Section 92 (the basic rule: sterling to be used)

Giving effect to allowances and charges

Section 43 (interpretation of sections 41 and 42)

Orders and regulations made by Treasury or Commissioners

Provisions applying on termination of lease

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Meaning of “qualifying flat”

Schedule 25 (Northern Ireland Airports Limited)

Proceeds from balancing events

Application of Act to parts of assets

Purchaser of land giving consideration for fixture

Section 400 (write-off of government investment)

The writing-down period

Section 407 (relationship between group relief and other relief)

Schedule 26 (transfers: tax)

Schedule 3 (taxation provisions)

Section 411 (exclusion of double allowance)

Companies not resident in the United Kingdom

Schedule 1 (certification of films as British films)

Schedule 28A (change in ownership of investment company: deductions)

Section 384 (restrictions on right of set-off)

Section 393A (losses: set off against profits of the same, or an earlier, accounting period)

Use for qualifying activity of plant or machinery provided for other purposes

Equipment lessor has right to sever fixture that is not part of building

Balancing allowances

Equipment lease is part of affordable warmth programme

Section 288 (interpretation)

New sections 40A to 40D (films)

Section 42 (relief for production or acquisition expenditure)

Section 403ZB (amounts eligible for group relief: excess capital allowances)

Sections 434D and 434E (capital allowances: management assets; investment assets)

Section 834 (interpretation of the Corporation Tax Acts)

Other definitions

Schedule 19AC (modification of Act in relation to overseas life insurance companies)

Sales treated as being for alternative amount: introductory

Section 42 (relief for production or acquisition expenditure)

Section 768B (change in ownership of investment company: deductions generally)

Section 397 (restriction of relief in case of farming and market gardening)

Schedule 28A (change in ownership of investment company: deductions)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Schedule 12 (leasing arrangements: finance leases and loans)

Section 48 (films: relief for production or acquisition expenditure)

Section 288 (interpretation)

New sections 40A to 40D (films)

Meaning of “control”

Schedule 12 (provision of services through an intermediary)

Schedule 12 (leasing arrangements: finance leases and loans)

Section 397 (restriction of relief in case of farming and market gardening)

Schedule 26 (transfers: tax)

Section 395 (leasing contracts and company reconstructions)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Section 151 (benefits under pilot schemes)

Schedule 8 (loan relationships)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Net allowance given

Balancing allowances

Section 48 (films: relief for production or acquisition expenditure)

Meaning of “qualifying flat”

Section 151 (benefits under pilot schemes)

First-year allowances

Section 98 (special returns, etc.)

Schedule 1 (certification of films as British films)

Schedule 12 (leasing arrangements: finance leases and loans)

New sections 40A to 40D (films)

Time when expenditure is incurred

Schedule 22 (tonnage tax)

Use for qualifying activity of plant or machinery which is a gift

Purchaser of land giving consideration for fixture

Transfer of asset by reason of cross-border merger

Section 411 (exclusion of double allowance)

Sections 434D and 434E (capital allowances: management assets; investment assets)

“Additional VAT liability” and “additional VAT rebate”

Schedule 26 (transfers: tax)

Schedule 3 (taxation provisions)

Section 530 (disposal of know-how)

Application of Act to parts of assets

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Section 768B (change in ownership of investment company: deductions generally)

Section 781 (assets leased to traders and others)

Sales treated as being at market value

Schedule 21 (tax relief in connection with schemes for rationalising industry and other redundancy schemes)

Election to treat sale as being for alternative amount

Schedule 22 (tonnage tax)

Purchaser of land giving consideration for fixture

The writing-down period

Schedule 10 (furnished accommodation)

Schedule 26 (transfers: tax)

Section 93 (use of currency other than sterling)

Meaning of “control”

Schedule 24 (provisions relating to the Railways Act 1993)

Section 42 (procedure for making claims etc.)

Section 137 (expenditure met by regional development plans to be disregarded for certain purposes)

Avoidance affecting proceeds of balancing event

Elections: supplementary

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Section 403ZB (amounts eligible for group relief: excess capital allowances)

Sections 434D and 434E (capital allowances: management assets; investment assets)

Section 492 (treatment of oil extraction activities etc. for tax purposes)

Section 118 (claims for income tax purposes)

Schedule 6 (adjustment on change of accounting basis)

Section 495 (regional development grants)

Section 781 (assets leased to traders and others)

Section 831 (interpretation of Act)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Schedule 28A (change in ownership of investment company: deductions)

Schedule 28AA (provision not at arms’ length)

Schedule 12 (building societies: change of status)

Schedule 11 (taxation provisions)

Schedule 24 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies)

Schedule 25 (Northern Ireland Airports Limited)

Section 65 (reimbursement by defaulter in respect of certain abandonment expenditure)

Schedule 4 (taxation provisions)

Schedule 12 (building societies: change of status)

Schedule 26 (transfers: tax)

561A

(1) This section applies to the transfer of a qualifying asset as part of the process of a merger to which section 140E of TCGA 1992 (mergers: assets within UK tax charge) applies (or would apply but for section 140E(2)(c)).

(2) Where this section applies to a transfer—

(a) the transfer does not give rise to any allowance or charge under this Act,

(b) anything done to or by the transferor in relation to assets transferred is to be treated after the transfer as having been done to or by the transferee (with any necessary apportionment of expenditure being made in a reasonable manner), and

(c) section 948 of CTA 2010 (modified application of CAA 2001 in relation to trade transfers without a change of ownership) does not apply.

(3) For the purposes of subsection (1) an asset is a “qualifying asset” if—

(a) it is transferred to the transferee as part of the process of the merger, and

(b) subsections (4) and (5) are satisfied in respect of it.

(4) This subsection is satisfied in respect of an asset if—

(a) the transferor is resident in the United Kingdom at the time of the transfer, or

(b) the asset is an asset of a permanent establishment in the United Kingdom of the transferor.

(5) This subsection is satisfied in respect of an asset if—

(a) the transferee is resident in the United Kingdom at the time of the transfer, or

(b) the asset is an asset of a permanent establishment of the transferee in the United Kingdom immediately following the transfer.

Elections: supplementary

Section 98 (special returns, etc.)

Schedule 3 (rules for assigning proceedings to General Commissioners)

Use for qualifying activity of plant or machinery provided for other purposes

Section 403ZB (amounts eligible for group relief: excess capital allowances)

Section 407 (relationship between group relief and other relief)

Transfer of a UK trade to a company in another member State

Section 395 (leasing contracts and company reconstructions)

Section 492 (treatment of oil extraction activities etc. for tax purposes)

Section 495 (regional development grants)

Section 518 (harbour reorganisation schemes)

Schedule 26 (transfers: tax)

Section 530 (disposal of know-how)

Section 577 (business entertaining expenses)

Section 768B (change in ownership of investment company: deductions generally)

Section 781 (assets leased to traders and others)

Section 828 (orders and regulations made by the Treasury or the Board)

Section 831 (interpretation of Act)

Sales treated as being at market value

Schedule 21 (tax relief in connection with schemes for rationalising industry and other redundancy schemes)

Election to treat sale as being for alternative amount

Schedule 28A (change in ownership of investment company: deductions)

Schedule 28AA (provision not at arms’ length)

Procedure for determining certain questions affecting two or more persons

Section 86 (spreading of relief for acquisition expenses)

Consequential amendments

Section 98 (special returns, etc.)

Schedule 2 (levy of Class 4 contributions with income tax)

Section 65A (Case V income from land outside UK: income tax)

Section 87 (taxable premiums etc.)

Section 91 (cemeteries)

Section 116 (arrangements for transferring relief)

Equipment lessor has right to sever fixture that is not part of building

Use for qualifying activity of plant or machinery provided for other purposes

Section 407 (relationship between group relief and other relief)

Schedule 3 (taxation provisions)

Section 195 (allowance of certain drilling expenditure)

Other definitions

Schedule 10 (furnished accommodation)

Section 411 (exclusion of double allowance)

Section 487 (credit unions)

Section 492 (treatment of oil extraction activities etc. for tax purposes)

Schedule 6 (adjustment on change of accounting basis)

Schedule 33 (taxation)

Section 768B (change in ownership of investment company: deductions generally)

Section 781 (assets leased to traders and others)

Section 195 (allowance of certain drilling expenditure)

Equipment lessor has right to sever fixture that is not part of building

Schedule 2 (levy of Class 4 contributions with income tax)

Schedule 12 (leasing arrangements: finance leases and loans)

Schedule 3 (assets held on 31st March 1982)

Schedule 25 (Northern Ireland Airports Limited)

Section 42 (relief for production or acquisition expenditure)

Section 48 (films: relief for production or acquisition expenditure)

Section 118 (claims for income tax purposes)

Leased assets: arrangements reducing disposal value of asset

Sales at under-value

Restriction of qualifying expenditure

Buildings for miners etc.: carry-back of balancing allowances

The relevant interest

Additional VAT rebates and balancing adjustments

Meaning of “offshore infrastructure”

Reduction of first-year allowances

Tax agreements for income tax purposes

Lessor’s income or profits

Sales treated as being at market value

Schedule 24 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies)

Schedule 17 (Northern Ireland electricity)

Buildings temporarily out of use

Section 93 (use of currency other than sterling)

Additional VAT liabilities and writing off initial allowances

Schedule 5 (transitional provisions and savings)

Schedule 2 (taxation)

Section 93 (use of currency other than sterling)

Schedule 24 (provisions relating to the Railways Act 1993)

Section 288 (interpretation)

Other definitions

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Apportionment of sums partly referable to non-qualifying assets

Schedule 25 (Northern Ireland Airports Limited)

Section 48 (films: relief for production or acquisition expenditure)

Schedule 33 (taxation)

Entitlement to writing-down allowances

Section 781 (assets leased to traders and others)

Schedule 3 (taxation provisions)

Schedule 28A (change in ownership of investment company: deductions)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Elections: supplementary

“Additional VAT liability” and “additional VAT rebate”

Apportionment of sums partly referable to non-qualifying assets

Introduction

Effect of successions

Apportionment where property sold together

Schedule 10 (furnished accommodation)

Section 403ZB (amounts eligible for group relief: excess capital allowances)

Sales treated as being at market value

Election to treat sale as being for alternative amount

Elections: supplementary

Schedule 2 (levy of Class 4 contributions with income tax)

Schedule 3 (taxation provisions)

Section 84 (gifts to educational establishments)

Section 397 (restriction of relief in case of farming and market gardening)

Section 403ZB (amounts eligible for group relief: excess capital allowances)

Section 117 (restriction on relief: individuals)

Section 359 (loan to buy machinery or plant)

Schedule 3 (assets held on 31st March 1982)

Section 41 (relief for preliminary expenditure)

Section 42 (relief for production or acquisition expenditure)

Section 359 (loan to buy machinery or plant)

Section 43 (interpretation of sections 41 and 42)

Section 379A (Schedule A losses)

Section 384 (restrictions on right of set-off)

Section 389 (supplementary provisions relating to carry-back of terminal losses)

Section 384 (restrictions on right of set-off)

New section 384A (restriction of set-off of plant and machinery allowances)

Schedule 3 (taxation provisions)

Section 359 (loan to buy machinery or plant)

Section 393A (losses: set off against profits of the same, or an earlier, accounting period)

Section 395 (leasing contracts and company reconstructions)

Section 397 (restriction of relief in case of farming and market gardening)

New sections 40A to 40D (films)

Section 528 (patents: manner of making allowances and charges)

Section 768B (change in ownership of investment company: deductions generally)

Section 781 (assets leased to traders and others)

Section 828 (orders and regulations made by the Treasury or the Board)

Section 768B (change in ownership of investment company: deductions generally)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 24 (provisions relating to the Railways Act 1993)

Section 530 (disposal of know-how)

Schedule 28A (change in ownership of investment company: deductions)

Section 151 (benefits under pilot schemes)

Schedule 8 (loan relationships)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Section 65 (reimbursement by defaulter in respect of certain abandonment expenditure)

Section 37 (consideration chargeable to tax on income)

Section 195 (allowance of certain drilling expenditure)

Schedule 6 (adjustment on change of accounting basis)

Schedule 17 (Northern Ireland electricity)

Section 195 (allowance of certain drilling expenditure)

Section 288 (interpretation)

New sections 40A to 40D (films)

Section 105 (corporation tax: use of currencies other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 10 (furnished accommodation)

Section 92 (the basic rule: sterling to be used)

Section 93 (use of currency other than sterling)

Schedule 2 (provisions relating to carrying out approved schemes or reorganisation)

Schedule 24 (provisions relating to the Railways Act 1993)

Schedule 33 (taxation)

Net allowance given

Section 151 (benefits under pilot schemes)

Section 48 (films: relief for production or acquisition expenditure)

Schedule 12 (leasing arrangements: finance leases and loans)

Schedule 22 (tonnage tax)

Schedule 12 (provision of services through an intermediary)

Section 118 (claims for income tax purposes)

Schedule 6 (adjustment on change of accounting basis)

Schedule 33 (taxation)

Section 105 (corporation tax: use of currencies other than sterling)

Schedule 12 (provision of services through an intermediary)

Schedule 26 (transfers: tax)

Use for qualifying activity of plant or machinery provided for other purposes

Long-life asset expenditure

Equipment lessor has right to sever fixture that is not part of building

Equipment lease is part of affordable warmth programme

Expenditure which is not first-year qualifying expenditure

Purchase of used building from developer

Calculation of amount after relevant event

When balancing adjustments are made

Net allowance given

Balancing allowances

Exclusion where sums payable in respect of depreciation

Expenditure on plant and machinery for use wholly in a ring fence trade

Expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises

Special provision for short chargeable periods

Energy-saving components of plant or machinery

Expenditure on plant or machinery for electric vehicle charging point

Application of section 303 where developer involved

Mines, transport undertakings etc.

Entitlement to writing-down allowances

Grants affecting entitlement to allowances

Apportionment of sums partly referable to non-qualifying assets

Lessor’s income or profits

Section 37 (consideration chargeable to tax on income)

Schedule 3 (assets held on 31st March 1982)

Section 93 (use of currency other than sterling)

Schedule 17 (Northern Ireland electricity)

Agricultural buildings allowances

Section 151 (benefits under pilot schemes)

Meaning of “qualifying building”

Schedule 3 (taxation provisions)

Meaning of “qualifying expenditure”

Meaning of “qualifying building”

Proceeds from balancing events

Section 411 (exclusion of double allowance)

Section 65 (reimbursement by defaulter in respect of certain abandonment expenditure)

Schedule 12 (leasing arrangements: finance leases and loans)

Equipment lessor has right to sever fixture that is not part of building

Transfer during formation of SE by merger

Tax agreements for income tax purposes

Sales treated as being at market value

Section 43 (interpretation of sections 41 and 42)

Section 93 (use of currency other than sterling)

Schedule 7 (transfer schemes relating to BBC transmission network: taxation provisions)

Other definitions

Schedule 2 (taxation)

Section 37 (consideration chargeable to tax on income)

Section 105 (corporation tax: use of currencies other than sterling)

Schedule 22 (tonnage tax)

Section 87 (taxable premiums etc.)

Section 91C (mineral exploration and access)

Section 116 (arrangements for transferring relief)

Section 393A (losses: set off against profits of the same, or an earlier, accounting period)

Section 395 (leasing contracts and company reconstructions)

Section 400 (write-off of government investment)

Schedule 3 (assets held on 31st March 1982)

Section 41 (relief for preliminary expenditure)

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