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

References to sale of property and time of sale

Meaning of “control”

Section 411 (exclusion of double allowance)

Section 70A (Case V income from land outside UK: corporation tax)

Section 37 (consideration chargeable to tax on income)

Section 195 (allowance of certain drilling expenditure)

Section 411 (exclusion of double allowance)

Section 487 (credit unions)

Section 43 (interpretation of sections 41 and 42)

Section 525 (capital sums: death, winding up or partnership change)

Schedule 17 (Northern Ireland electricity)

Schedule 10 (furnished accommodation)

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

Schedule 24 (provisions relating to the Railways Act 1993)

Schedule 25 (Northern Ireland Airports Limited)

Schedule 4 (taxation provisions)

Schedule 3 (taxation provisions)

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

Schedule 26 (transfers: tax)

Schedule 33 (taxation)

Schedule 26 (transfers: tax)

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

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

Purchaser of land giving consideration for fixture

Anti-avoidance

Calculation of amount after relevant event

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

Schedule 12 (provision of services through an intermediary)

Section 93 (use of currency other than sterling)

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

Schedule 4 (taxation provisions)

Schedule 22 (tonnage tax)

Section 151 (benefits under pilot schemes)

Schedule 12 (leasing arrangements: finance leases and loans)

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

Meaning of “overseas leasing”

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

Meaning of “overseas leasing”

Meaning of “chargeable period”

Production animals etc.

Exclusion where sums payable in respect of depreciation

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

Energy-saving components of plant or machinery

Expenditure on cars with low carbon dioxide emissions

Expenditure on plant or machinery for gas refuelling station

Restriction of qualifying expenditure

Introduction

Single ship pool

Pre-trading expenditure on mineral exploration and access

Additional VAT rebates and writing off qualifying expenditure

Determination of entitlement or liability

Section 57 (regulations about appeals)

Schedule 12 (building societies: change of status)

Introduction

Giving effect to allowances and charges: trades

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

Schedule 3 (taxation provisions)

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

Section 195 (allowance of certain drilling expenditure)

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

Schedule 26 (transfers: tax)

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

The writing-down period

Questions to which procedure in section 563 applies

Tax agreements for income tax purposes

Schedule 3 (rules for assigning proceedings to General Commissioners)

Election to treat sale as being for alternative amount

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

Orders and regulations

Section 518 (harbour reorganisation schemes)

570B

(1) Any orders or regulations made by the Treasury or the Commissioners for Her Majesty's Revenue and Customs under this Act must be made by statutory instrument.

(2) Any orders or regulations made by the Treasury or the Commissioners under this Act are subject to annulment in pursuance of a resolution of the House of Commons.

(3) Subsection (2) does not apply to any regulations made under section 45P, 45R, 70YJ or 270BNC or any order made under section 82(4)(d).

(4) An instrument containing regulations under section 45P , 45R or 270BNC must be laid before the House of Commons after being made.

(5) If the regulations are not approved by the House of Commons before the end of the period of 28 days beginning with the day on which they are made, they cease to have effect at the end of that period (if they have not already ceased to have effect under subsection (6)).

(6) If, on any day during that period of 28 days, the House of Commons, in proceedings on a motion that (or to the effect that) the regulations be approved, comes to a decision rejecting the regulations, they shall cease to have effect at the end of that day.

(7) In reckoning any such period of 28 days, no account is to be taken of any time during which—

(a) Parliament is prorogued or dissolved, or

(b) the House of Commons is adjourned for more than four days.

(8) Where regulations cease to have effect under subsection (6), their ceasing to have effect is without prejudice to anything done in reliance on them.

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

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

575A

(1) In section 575 and this section—

“company” includes any body corporate or unincorporated association, but does not include a partnership (and see also subsection (2)),

“control” is to be read in accordance with sections 450 and 451 of CTA 2010 (except where otherwise indicated),

“principal settlement” has the meaning given by paragraph 1 of Schedule 4ZA to TCGA 1992,

“relative” means brother, sister, ancestor or lineal descendant,

“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act), and

“sub-fund settlement” has the meaning given by paragraph 1 of Schedule 4ZA to TCGA 1992.

(2) For the purposes of section 575—

(a) a unit trust scheme is treated as if it were a company, and

(b) the rights of the unit holders are treated as if they were shares in the company.

(3) For the purposes of section 575 “trustee”, in the case of a settlement in relation to which there would be no trustees apart from this subsection, means any person—

(a) in whom the property comprised in the settlement is for the time being vested, or

(b) in whom the management of that property is for the time being vested.

Section 466(4) of ITA 2007 does not apply for the purposes of this subsection.

(4) If any provision of section 575 provides that a person (“A”) is connected with another person (“B”), it also follows that B is connected with A.

Section 400 (write-off of government investment)

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

Section 151 (benefits under pilot schemes)

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

Section 91C (mineral exploration and access)

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

Section 832 (interpretation of the Tax Acts)

Schedule 18 (group relief)

Section 495 (regional development grants)

Section 407 (relationship between group relief and other relief)

Section 518 (harbour reorganisation schemes)

Section 93 (use of currency other than sterling)

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

Section 533 (interpretation of sections 520 to 532)

New sections 578A and 578B (expenditure on car hire)

Section 832 (interpretation of the Tax Acts)

Section 532 (application of 1990 Act)

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)

Section 781 (assets leased to traders and others)

Section 831 (interpretation of Act)

Schedule 28AA (provision not at arms’ length)

Section 126 (pools payments for football ground improvements)

Schedule 17 (Northern Ireland electricity)

Schedule 25 (Northern Ireland Airports Limited)

Schedule 3 (taxation provisions)

Schedule 8 (loan relationships)

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

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

Section 118 (claims for income tax purposes)

Schedule 33 (taxation)

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

Schedule 22 (tonnage tax)

Long-life asset expenditure

The writing-down period

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

Sales treated as being at market value

Section 411 (exclusion of double allowance)

Sections 520 to 523 (patents)

Section 86 (spreading of relief for acquisition expenses)

Section 98 (special returns, etc.)

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

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

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

Section 531 (disposal of know-how: supplementary provisions)

Section 400 (write-off of government investment)

Section 407 (relationship between group relief and other relief)

Schedule 24 (provisions relating to the Railways Act 1993)

Schedule 18 (group relief)

Section 42 (relief for production or acquisition expenditure)

Schedule 3 (taxation provisions)

Section 151 (benefits under pilot schemes)

Schedule 26 (transfers: tax)

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

Section 118 (claims for income tax purposes)

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

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

Purchaser of land giving consideration for fixture

Anti-avoidance

Qualifying enterprise zone expenditure

Calculation of amount after relevant event

Balancing adjustment on realisation of capital value

Section 43 (interpretation of sections 41 and 42)

Additional VAT liabilities and initial allowances

Schedule 25 (Northern Ireland Airports Limited)

Schedule 3 (taxation provisions)

Section 93 (use of currency other than sterling)

Schedule 25 (Northern Ireland Airports Limited)

Apportionment of sums partly referable to non-qualifying assets

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

Balancing allowances

Section 400 (write-off of government investment)

Section 407 (relationship between group relief and other relief)

Schedule 1 (certification of films as British films)

Section 288 (interpretation)

Meaning of “control”

Other definitions

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

Section 98 (special returns, etc.)

Schedule 3 (rules for assigning proceedings to General Commissioners)

Section 530 (disposal of know-how)

Section 532 (application of 1990 Act)

Section 84 (gifts to educational establishments)

Section 834 (interpretation of the Corporation Tax Acts)

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

Section 395 (leasing contracts and company reconstructions)

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

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

Schedule 24 (provisions relating to the Railways Act 1993)

New sections 578A and 578B (expenditure on car hire)

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

Section 781 (assets leased to traders and others)

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)

Section 118 (claims for income tax purposes)

Schedule 17 (Northern Ireland electricity)

Schedule 33 (taxation)

Schedule 4 (taxation provisions)

Schedule 3 (taxation provisions)

Section 151 (benefits under pilot schemes)

Schedule 8 (loan relationships)

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 118 (claims for income tax purposes)

Schedule 33 (taxation)

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

Schedule 22 (tonnage tax)

Schedule 26 (transfers: tax)

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

Meaning of “overseas leasing”

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

Purchaser of land giving consideration for fixture

Anti-avoidance

Qualifying enterprise zone expenditure

Calculation of amount after relevant event

When balancing adjustments are made

Balancing adjustment on realisation of capital value

The writing-down period

Equipment lease is part of affordable warmth programme

Schedule 26 (transfers: tax)

Meaning of “control”

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

Section 495 (regional development grants)

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

Section 532 (application of 1990 Act)

Section 781 (assets leased to traders and others)

Section 831 (interpretation of Act)

Section 834 (interpretation of the Corporation Tax Acts)

Section 400 (write-off of government investment)

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

Section 577 (business entertaining expenses)

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

Schedule 28AA (provision not at arms’ length)

Schedule 12 (building societies: change of status)

Section 126 (pools payments for football ground improvements)

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

Section 288 (interpretation)

New sections 40A to 40D (films)

Section 42 (relief for production or acquisition expenditure)

Section 43 (interpretation of sections 41 and 42)

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

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

Expenditure which is not first-year qualifying expenditure

Purchase of used building from developer

Balancing allowances

Expenditure on integral features

33A

(1) This section applies where a person carrying on a qualifying activity incurs expenditure on the provision or replacement of an integral feature of a building or structure used by the person for the purposes of the qualifying activity.

(2) This Part (including in particular section 11(4)) applies as if—

(a) the expenditure were capital expenditure on the provision of plant or machinery for the purposes of the qualifying activity, and

(b) the person who incurred the expenditure owned plant or machinery as a result of incurring it.

(3) If the expenditure is qualifying expenditure, it may not be deducted in calculating the income from the qualifying activity.

(4) If the expenditure is not qualifying expenditure, whether it may be so deducted is to be determined without regard to this section.

(5) For the purposes of this section each of the following is an integral feature—

(a) an electrical system (including a lighting system),

(b) a cold water system,

(c) a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system,

(d) a lift, an escalator or a moving walkway,

(e) external solar shading.

(6) The items listed in subsection (5) do not include any asset whose principal purpose is to insulate or enclose the interior of a building or to provide an interior wall, floor or ceiling which (in each case) is intended to remain permanently in place.

(7) The Treasury may by order—

(a) provide that subsection (5) does not include a feature of a building or structure specified in the order, expenditure on which would (if not within subsection (5)) be qualifying expenditure other than special rate expenditure, and

(b) add to the list in subsection (5) a feature of a building or structure expenditure on the provision of which would not (apart from the order) be expenditure on the provision of plant or machinery.

(8) An order under subsection (7) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

33B

(1) Expenditure to which this section applies is to be treated for the purposes of section 33A as expenditure on the replacement of an integral feature.

(2) This section applies to expenditure incurred by a person on an integral feature if the amount of the expenditure is more than 50% of the cost of replacing the integral feature at the time the expenditure is incurred.

(3) Subsection (4) applies where—

(a) a person incurs expenditure (“initial expenditure”) on an integral feature which is not more than 50% of the cost of replacing the integral feature at the time it is incurred, but

(b) in the period of 12 months beginning with the initial expenditure being incurred the person incurs further expenditure on the integral feature.

(4) If the aggregate of—

(a) the amount of the initial expenditure, and

(b) the amount (or the aggregate of the amounts) of the further expenditure,

is more than 50% of the cost of replacing the integral feature at the time the initial expenditure was incurred, this section applies to the initial expenditure and the further expenditure.

(5) Where section 33A applies because of subsection (4), all such assessments and adjustments of assessments are to be made as are necessary to give effect to that section.

Chapter 3A — AIA qualifying expenditure

38A

(1) An annual investment allowance is not available unless the qualifying expenditure is AIA qualifying expenditure.

(2) Expenditure is AIA qualifying expenditure if—

(a) it is incurred by a qualifying person on or after the relevant date, and

(b) it is not excluded by any of the general exclusions in section 38B.

(3) “Qualifying person” means—

(a) an individual,

(b) a partnership of which all the members are individuals, or

(4) In determining whether expenditure is AIA qualifying expenditure, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

(5) “The relevant date” means—

(a) for corporation tax purposes, 1 April 2008, and

(b) for income tax purposes, 6 April 2008.

38B

Expenditure within any of the following general exclusions is not AIA qualifying expenditure.

General exclusion 1The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.

General exclusion 2The expenditure is incurred on the provision of a car (as defined by section 268A).

General exclusion 3The expenditure is incurred wholly for the purposes of a ring fence trade in respect of which tax is chargeable under section 330(1) of CTA 2010 (supplementary charge in respect of ring fence trades).

General exclusion 4The circumstances of the incurring of the expenditure are that—the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of the trade or business carried on by a person other than the person incurring the expenditure, andthe obtaining of an annual investment allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.

General exclusion 5Any of the following sections applies—section 13 (use for qualifying activity of plant or machinery provided for other purposes);section 13A (use for other purposes of plant or machinery provided for long funding leasing);section 14 (use for qualifying activity of plant or machinery which is a gift).This is subject to section 161 (pre-trading expenditure on mineral exploration and access).

Expenditure on cars with low carbon dioxide emissions

Election to apportion sale price on sale of qualifying interest

Plant or machinery used for less than five years in a ring fence trade

Annual investment allowance

51A

(1) A person is entitled to an allowance (an “annual investment allowance”) in respect of AIA qualifying expenditure if—

(a) the expenditure is incurred in a chargeable period to which this Act applies, and

(b) the person owns the plant and machinery at some time during that chargeable period.

(2) Any annual investment allowance is made for the chargeable period in which the AIA qualifying expenditure is incurred.

(3) If the AIA qualifying expenditure incurred in a chargeable period is less than or equal to the maximum allowance, the person is entitled to an annual investment allowance in respect of all the AIA qualifying expenditure.

(4) If the AIA qualifying expenditure incurred in a chargeable period is more than the maximum allowance, the person is entitled to an annual investment allowance in respect of so much of the AIA qualifying expenditure as does not exceed the maximum allowance.

(5) The maximum allowance is £1,000,000.

(6) But if the chargeable period is more or less than a year, the maximum allowance is proportionately increased or reduced.

(7) A person may claim an annual investment allowance in respect of all the AIA qualifying expenditure in respect of which the person is entitled to an allowance, or in respect of only some of it.

(8) The Treasury may by order substitute for the amount for the time being specified in subsection (5) such greater amount as it thinks fit.

(9) An order under subsection (8) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

(10) This section is subject to—

(a) sections 51B to 51N (restrictions on entitlement to annual investment allowance),

section 70DA(2) (transfer and long funding leaseback: no annual investment allowance for lessee),

(b) section 205 (reduction of allowance if plant or machinery provided partly for purposes other than those of qualifying activity),

(d) sections 217, 218A, 229A(2) and 241 (anti-avoidance: no allowance in certain cases),

and needs to be read with section 236 (additional VAT liabilities).

51B

(1) A company is entitled to a single annual investment allowance in respect of all the qualifying activities carried on by the company in a chargeable period.

(2) The company may allocate the annual investment allowance to the relevant AIA qualifying expenditure as it thinks fit.

(3) The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the company in the chargeable period mentioned in subsection (1).

(4) This section is subject to sections 51C, 51D and 51E.

51C

(1) This section applies in relation to—

(a) a company which, in a financial year, is a parent undertaking of one or more other companies, and

(b) those other companies.

(2) The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3) The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4) The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

(5) A company (“P”) is a parent undertaking of another company (“C”) in a financial year if P is a parent undertaking of C at the end of C's chargeable period ending in that financial year.

(6) In this section “parent undertaking” has the same meaning as in section 1162 of the Companies Act 2006.

(7) This section is subject to section 51D.

51D

(1) Where in a financial year two or more groups of companies are—

(a) controlled by the same person (see section 51F), and

(b) related to one another (see section 51G),

this section applies in relation to the companies which are members of those groups.

(2) The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3) The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4) The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

(5) In this section and in sections 51F and 51G, a group of companies means—

(a) a company which, in the financial year mentioned in subsection (1), is a parent undertaking of one or more other companies, and

(b) those other companies,

(and the members of the group are the company which is the parent undertaking and those other companies).

(6) A company (“P”) is a parent undertaking of another company (“C”) in a financial year if P is a parent undertaking of C at the end of C's chargeable period ending in that financial year.

(7) In this section “parent undertaking” has the same meaning as in section 1162 of the Companies Act 2006.

51E

(1) This section applies in relation to two or more companies which in a financial year are—

(a) controlled by the same person (see section 51F), and

(b) related to one another (see section 51G),

and in relation to which to neither section 51C nor section 51D applies.

(2) The companies are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(3) The companies may allocate the annual investment allowance to the relevant AIA qualifying expenditure as they think fit.

(4) The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred by the companies in chargeable periods ending in the financial year mentioned in subsection (1).

51F

(1) A company is controlled by a person in a financial year if it is controlled by that person at the end of its chargeable period ending in that financial year.

(2) A group of companies is controlled by a person in a financial year if the company which is the parent undertaking is controlled by that person at the end of its chargeable period ending in that financial year.

(3) Section 574(2) defines “control” in relation to a company which is a body corporate.

(4) In relation to a company (“C”) which is not a body corporate, control means the power of a person (“P”) to secure—

(a) by means of the holding of shares or the possession of voting power in relation to C or another body, or

(b) as a result of any powers conferred by the constitution of C or another body,

that the affairs of C are conducted in accordance with P's wishes.

(5) In subsection (4) “shares” has the meaning given by section 1161(2) of the Companies Act 2006.

51G

(1) A company (“C1”) is related to another company (“C2”) in a financial year if one or both of—

(a) the shared premises condition, and

(b) the similar activities condition,

are met in relation to the companies in that financial year.

(2) Where C1 is related to C2 in a financial year, C1 is also related to any other company to which C2 is related in that financial year.

(3) A group of companies (“G1”) is related to another group of companies (“G2”) in a financial year if in that financial year a company which is a member of G1 is related to a company which is a member of G2.

(4) Where G1 is related to G2 in a financial year, G1 is also related to any other group of companies to which G2 is related in that financial year.

(5) The shared premises condition is met in relation to two companies in a financial year if, at the end of the relevant chargeable period of one or both of the companies, the companies carry on qualifying activities from the same premises.

(6) The similar activities condition is met in relation to two companies in a financial year if—

(a) more than 50% of the turnover of one company for the relevant chargeable period is derived from qualifying activities within a particular NACE classification, and

(b) more than 50% of the turnover of the other company for the relevant chargeable period is derived from qualifying activities within that NACE classification.

(7) In this section—

“NACE classification” means the first level of the common statistical classification of economic activities in the European Union established by Regulation (EC) No 1893/2006 of the European Parliament and the Council of 20 December 2006 (as that Regulation has effect in EU law), and

“relevant chargeable period”, in relation to a company and a financial year, means the chargeable period of the company ending in that financial year.

51H

(1) This section applies in relation to two or more qualifying activities which, in a tax year—

(a) are carried on by a qualifying person other than a company,

(b) are controlled by the same person (see section 51I), and

(2) A qualifying activity is carried on by a qualifying person in a tax year if it is carried on by the person at the end of the chargeable period for the activity ending in the tax year.

(3) Where all the qualifying activities are carried on by one qualifying person, that person is entitled to a single annual investment allowance in respect of the relevant AIA qualifying expenditure.

(4) Where the qualifying activities are carried on by more than one qualifying person, those persons are entitled to a single annual investment allowance between them in respect of the relevant AIA qualifying expenditure.

(5) The person or persons carrying on the qualifying activities may allocate the annual investment allowance to the relevant AIA qualifying expenditure as the person or persons think fit.

(6) The relevant AIA qualifying expenditure is the AIA qualifying expenditure incurred for the purposes of the qualifying activities in the chargeable periods for those activities ending in the tax year mentioned in subsection (1).

51I

(1) A qualifying activity is controlled by a person in a tax year if it is controlled by the person at the end of the chargeable period for that activity which ends in that tax year.

(2) A qualifying activity carried on by an individual is controlled by the individual who carries it on.

(3) A qualifying activity carried on by a partnership is controlled by the person (if any) who controls the partnership.

(4) Section 574(3) defines “control” in relation to a partnership.

(5) Where partners who between them control one partnership also between them control another partnership, the qualifying activities carried on by the partnerships are to be treated as controlled by the same person.

51J

(1) A qualifying activity (“A1”) is related to another qualifying activity (“A2”) in a tax year if one or both of—

(a) the shared premises condition, and

(b) the similar activities condition,

are met in relation to the activities in the tax year.

(2) Where A1 is related to A2 in a tax year, A1 is also related to any other qualifying activity to which A2 is related in that tax year.

(3) The shared premises condition is met in relation to two qualifying activities in a tax year if, at the end of the relevant chargeable period for one or both of the activities, the activities are carried on from the same premises.

(4) The similar activities condition is met in relation to two qualifying activities in a tax year if, at the end of the relevant chargeable period for one or both of the activities, the activities are within the same NACE classification.

(5) In this section—

“NACE classification” has the same meaning as in section 51G, and

“relevant chargeable period”, in relation to a qualifying activity and a tax year, means the chargeable period for that activity ending in that tax year.

51K

(1) This section applies where because of section 51B, 51C, 51D, 51E or 51H a person is (or persons between them are) entitled to a single annual investment allowance in respect of relevant AIA qualifying expenditure.

(2) If the relevant AIA qualifying expenditure is less than or equal to the maximum allowance, the person is (or the persons between them are) entitled to an annual investment allowance in respect of all the relevant AIA qualifying expenditure.

(3) If the relevant AIA qualifying expenditure is more than the maximum allowance, the person is (or the persons between them are) entitled to an annual investment allowance in respect of so much of the relevant AIA qualifying expenditure as does not exceed the maximum allowance.

(4) The maximum allowance is the amount for the time being specified in section 51A(5); but this is subject to sections 51M and 51N (which provide that in certain cases an additional amount of annual investment allowance may be available).

(5) The person or persons may claim an annual investment allowance in respect of all the relevant AIA qualifying expenditure in respect of which the person is (or the persons between them are) entitled to an allowance, or in respect of only some of it.

(6) The amount of the annual investment allowance allocated to relevant AIA qualifying expenditure incurred in a chargeable period must not exceed the amount of the annual investment allowance to which a person would be entitled in respect of that expenditure under section 51A(5) and (6) if section 51B, 51C, 51D, 51E or 51H did not apply.

51L

(1) This section applies where—

(a) more than one chargeable period of a company ends in a financial year, or

(b) more than one chargeable period for a qualifying activity ends in a tax year.

(2) Whether section 51C, 51D or 51E applies in relation to the company, or section 51H applies in relation to the qualifying activity, is to be determined in relation to each chargeable period ending in that year as if it were the only chargeable period ending in that year.

(3) AIA qualifying expenditure incurred in a chargeable period in relation to which the section in question does not apply is not relevant AIA qualifying expenditure for the purposes of that section.

51M

(1) This section applies where—

(a) section 51H applies in relation to two or more qualifying activities controlled by a person (“P”) in a tax year, and

(b) the relevant chargeable period for one of those qualifying activities (“A1”) is longer than a year.

(2) An additional amount of annual investment allowance may be allocated to relevant AIA qualifying expenditure incurred for the purposes of A1.

(3) That additional amount is the amount, or the aggregate of the amounts, of any relevant unused allowance for each tax year (a “previous tax year”)—

(a) which falls before the tax year mentioned in subsection (1)(a), and

(b) in which part of A1's relevant chargeable period falls.

(4) The amount of the relevant unused allowance for a previous tax year is (subject to subsections (7) and(8))—

$MA-AM$

but where the amount given by that formula is less than nil, the amount of the relevant unused allowance for the previous tax year is nil.

(5) In subsection (4)—

MA is the amount specified in section 51A(5) in relation to the previous tax year, and

AM is the amount of any annual investment allowance made under section 51A or 51K in respect of AIA qualifying expenditure incurred for the purposes of a relevant qualifying activity in the chargeable period for that activity ending in the previous tax year.

(6) “Relevant qualifying activity” means—

(a) any qualifying activity carried on by a qualifying person other than a company which was controlled by P in the previous tax year (see section 51I) and related to A1 in that tax year (see section 51J), and

(b) if A1 was controlled by P in the previous tax year (see section 51I), A1.

(7) Where any part of the amount calculated under subsection (4) has, on a previous application of this section, been allocated to AIA qualifying expenditure incurred for the purposes of a qualifying activity controlled by P in a tax year before that mentioned in subsection (1)(a), the amount of the relevant unused allowance is reduced accordingly.

(8) Where the amount of the relevant unused allowance for a previous tax year would (apart from this subsection) exceed—

$DCPYDY×MA$

the amount of the relevant unused allowance for that tax year is limited to the amount given by that formula.

(9) In subsection (8)—

DCPY is the number of days in A1's relevant chargeable period falling in the previous tax year,

DY is the number of days in that tax year, and

MA has the meaning given by subsection (5).

(10) Nothing in this section prevents section 51K(6) applying in relation to relevant AIA qualifying expenditure incurred for the purposes of A1.

(11) In this section references to a relevant chargeable period, in relation to a qualifying activity, are to the chargeable period for that activity ending in the tax year mentioned in subsection (1)(a).

51N

(1) This section applies where—

(a) section 51H applies in relation to two or more qualifying activities controlled by a person (“P”) in a tax year, and

(b) the relevant chargeable period for more than one of those qualifying activities is longer than a year.

(2) Section 51M applies in relation to each of the qualifying activities mentioned in subsection (1)(b) and the tax year mentioned in subsection (1)(a), as it applies in relation to A1 and the tax year mentioned in subsection (1)(a) of that section.

(3) But where two or more of the qualifying activities mentioned in subsection (1)(b) were related in a previous tax year, section 51M applies with the following modifications.

(4) The amount of any relevant unused allowance for that tax year is to be calculated under section 51M(4) to (7) (without regard to section 51M(8)).

(5) For that purpose section 51M(6) applies as if the references to A1 were references to any of the qualifying activities mentioned in subsection (1)(b).

(6) The amount of the relevant unused allowance may be allocated between those activities, but this is subject to subsection (7).

(7) The amount of the relevant unused allowance allocated to any one of those activities may not exceed the amount given by the formula in section 51M(8).

Prevention of double relief

52A

A person may not claim—

(a) an annual investment allowance and a first-year allowance in respect of the same expenditure, or

(b) first-year allowances under two or more of the provisions listed in section 39 in respect of the same expenditure.

56A

(1) This section applies in relation to the main pool and the special rate pool.

(2) Where the amount by which AQE exceeds TDR is less than or equal to the small pool limit, the amount of the writing-down allowance to which a person is entitled for a chargeable period is the amount by which AQE exceeds TDR.

(3) The small pool limit is £1,000, except that—

(a) if the chargeable period is more or less than a year, it is proportionately increased or reduced, and

(b) if the qualifying activity has been carried on for part only of the chargeable period, it is proportionately reduced.

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

(5) The Treasury may by order substitute for the amount for the time being specified in subsection (3) such other amount as it thinks fit.

(6) An order under subsection (5) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

Disposal of plant or machinery subject to lease where income retained

Chapter 10A — Special rate expenditure

Special rate expenditure

104A

(1) “Special rate expenditure” means—

(a) expenditure incurred on or after the first relevant date to which section 28 (thermal insulation) applies,

(b) expenditure incurred on or after that date to which section 33A (integral features) applies,

(d) long-life asset expenditure (within the meaning of that Chapter) incurred before that date but allocated to a pool in a chargeable period beginning on or after that date, ...

(e) expenditure incurred on or after the second relevant date on the provision of a car that is not a main rate car ...

(f) expenditure incurred on or after 1 April 2010 on the provision of cushion gas (within the meaning given by section 70J(7)), and

(g) expenditure incurred on or after the third relevant date on the provision of solar panels.

(2) The first relevant date is—

(a) for corporation tax purposes, 1 April 2008, and

(b) for income tax purposes, 6 April 2008.

(3) The second relevant date is—

(a) for corporation tax purposes, 1 April 2009, and

(b) for income tax purposes, 6 April 2009.

(3A) The third relevant date is—

(a) for corporation tax purposes, 1 April 2012, and

(b) for income tax purposes, 6 April 2012.

(4) In this section—

“car” has the meaning given in section 268A;

“main rate car” has the meaning given in section 104AA.

104B

(1) If part only of the capital expenditure on plant and machinery is special rate expenditure—

(a) the part which is such expenditure, and

(b) the part which is not,

are to be treated for the purposes of this Act as expenditure on separate items of plant or machinery.

(2) For the purposes of subsection (1), all such apportionments are to be made as are just and reasonable.

Rules applying to special rate expenditure

104C

(1) Special rate expenditure to which this section applies, if allocated to a pool, must be allocated to a class pool (“the special rate pool”).

(2) This section applies to special rate expenditure if—

(a) it is incurred wholly and exclusively for the purposes of a qualifying activity, and

(b) it is not expenditure which is required to be allocated to a single asset pool.

104D

(1) The amount of the writing-down allowance to which a person is entitled for a chargeable period in respect of expenditure which is special rate expenditure is 6% of the amount by which AQE exceeds TDR (see Chapter 5).

(1A) But, in relation to special rate expenditure incurred wholly for the purposes of a ring fence trade in respect of which tax is chargeable under section 330(1) of CTA 2010 (supplementary charge in respect of ring fence trades), the amount of the writing-down allowance to which a person is entitled for a chargeable period is 10% of the amount by which AQE exceeds TDR.

(2) Subsection (1) applies even if the special rate expenditure is in a single asset pool.

(3) In the case of expenditure in the special rate pool, this section is subject to section 56A (writing-down allowance for small pools).

(4) Subsections (3) and (4) of section 56 (proportionate increases or reductions in amount in certain cases) apply for the purposes of subsection (1) of this section as they apply for the purposes of subsection (1) of that section.

104E

(1) This section applies if—

(a) section 104D (writing-down allowances at 6% or 10%) has had effect in relation to any special rate expenditure incurred by a person (“the taxpayer”),

(b) any disposal event occurs in relation to the item on which the expenditure was incurred,

(c) the disposal value to be brought into account by the taxpayer would (but for this section) be less than the notional written-down value of the item, and

(d) the disposal event is part of, or occurs as a result of, a scheme or arrangement the main purpose or one of the main purposes of which is the obtaining by the taxpayer of a tax advantage under this Part.

(2) The disposal value that the taxpayer must bring into account is the notional written-down value of the item.

(3) The notional written-down value is—

$$QE-A$where—QE is the taxpayer's expenditure on the item that is qualifying expenditure, andA is the total of all allowances which could have been made to the taxpayer in respect of that expenditure if—that expenditure had been the only expenditure that had ever been taken into account in determining the taxpayer's available qualifying expenditure,where the item is a long-life asset, that expenditure had not been prevented by the application of a monetary limit from being long-life asset expenditure, andall allowances had been made in full.$

Buildings temporarily out of use

Introduction

218A

(1) This section applies where an arrangement is entered into wholly or mainly for a disqualifying purpose.

(2) Arrangements are entered into for a disqualifying purpose if their main purpose, or one of their main purposes, is to enable a person to obtain an annual investment allowance to which the person would not otherwise be entitled.

(3) The annual investment allowance mentioned in subsection (2) is not to be made.

(4) Any annual investment allowance which is prohibited by subsection (3), but which has already been made, is to be withdrawn.

First-year tax credits

262A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

313A

(1) This section applies where—

(a) there is a sale of the relevant interest in the building which is a balancing event to which section 314 applies,

(b) the buyer and seller have different chargeable periods,

(d) the purpose, or one of the main purposes, of the sale is the obtaining of a tax advantage by the buyer under this Part.

(2) The writing-down allowance to which the buyer is entitled for the chargeable period in which the sale takes place is—

$$DICP×WDA$where—DI is the number of days in the chargeable period for which the buyer is entitled to the relevant interest,CP is the number of days in the chargeable period, andWDA is the writing-down allowance to which the buyer would be entitled apart from this section.$

Transfer of asset by reason of cross-border merger

Orders and regulations made by Treasury or Commissioners

SCHEDULE A1

Part 1 — Entitlement to first-year tax credits

Entitlement to first-year tax credits

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount of first-year tax credit

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “relevant first-year expenditure”

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incurring a loss in carrying on a qualifying activity

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrelieved loss

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total amount of company's PAYE and NICs liabilities

17

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 2 — Giving effect to first-year tax credits

Payment in respect of first-year tax credit

18

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on losses carried forward

19

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment in respect of first-year tax credit not income

23

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 3 — Clawback of first-year tax credit

Circumstances in which first-year tax credit clawed back

24

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

25

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amount of restored loss

26

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Clawback of first-year tax credits: administrative provision

27

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 4 — Supplementary

Artificially inflated claims

28

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

29

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule 2 (taxation)

Section 84 (gifts to educational establishments)

Section 384 (restrictions on right of set-off)

Balancing allowances

Section 400 (write-off of government investment)

Section 407 (relationship between group relief and other relief)

Section 411 (exclusion of double allowance)

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

Section 530 (disposal of know-how)

Section 577 (business entertaining expenses)

Schedule 28AA (provision not at arms’ length)

Schedule 25 (Northern Ireland Airports Limited)

Section 86 (spreading of relief for acquisition expenses)

Schedule 4 (taxation provisions)

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

Section 195 (allowance of certain drilling expenditure)

Schedule 10 (furnished accommodation)

Schedule 12 (leasing arrangements: finance leases and loans)

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

Section 118 (claims for income tax purposes)

Schedule 6 (adjustment on change of accounting basis)

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

Balancing allowances

Special leasing of plant or machinery

Energy-saving components of plant or machinery

Expenditure on cars with low carbon dioxide emissions

Decommissioning services supplied by connected person

Equipment lessors

Plant or machinery used for less than five years in a ring fence trade

Reduction of annual investment allowance and first-year allowances

Meaning of “qualifying business premises”

Introduction

General limit on amount of writing-down allowance

Meaning of “control”

Section 93 (use of currency other than sterling)

Schedule 4 (taxation provisions)

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

Determination of entitlement or liability

Schedule 22 (tonnage tax)

Section 42 (relief for production or acquisition expenditure)

Meaning of “control”

Consequential amendments

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

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

Section 411 (exclusion of double allowance)

Section 495 (regional development grants)

Section 118 (claims for income tax purposes)

Section 781 (assets leased to traders and others)

Section 831 (interpretation of Act)

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)

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

Schedule 22 (tonnage tax)

Schedule 11 (taxation provisions)

Section 126 (pools payments for football ground improvements)

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

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

New sections 40A to 40D (films)

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

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

Balancing allowances

The different kinds of pools

Transfers, assignments etc by lessor

The designated period

Special provision for short chargeable periods

Expenditure of small or medium-sized enterprises: companies

Prevention of double relief

Pooling of qualifying expenditure

SME partnership leaving NI corporation tax regime

Disposal value on cessation of notional ownership

Transfers, assignments etc by lessor

70DA

(1) This section applies where—

(a) a person (“S”) transfers plant or machinery to another person (“B”),

(b) at any time after the date of the transfer, the plant or machinery is available to be used by S, or a person (other than B) who is connected with S (“CS”), under a plant or machinery lease, and

(2) No annual investment allowance or first-year allowance is to be made in respect of the expenditure of S or CS under the lease.

(3) The amount, if any, by which E exceeds D is to be left out of account in determining the available qualifying expenditure of S or CS.

(4) E is the capital expenditure of S or CS on the provision of the plant or machinery under the long funding lease.

(5) If S is required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), D is that disposal value.

(5A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and

(b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

(6) Otherwise, D is whichever of the following is the smallest—

(a) the market value of the plant or machinery;

(b) if S incurred capital expenditure on the provision of the plant or machinery before the transfer referred to in subsection (1)(a), the amount of that expenditure;

(c) if a person connected with S incurred capital expenditure on the provision of the plant or machinery before that transfer, the amount of that expenditure.

(7) Section 70Y(3) applies to references in this section to a transfer of plant or machinery by a person.

(8) For the purposes of this section a transfer involving the grant of a lease takes place on the commencement of the term of the lease.

(9) “Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the transfer referred to in subsection (1)(a).

(10) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

Application of Chapter to part of expenditure

Meaning of “main rate car”

Exceptions to section 161C(2)

104AA

(1) “Main rate car” means—

(a) a car that is first registered before 1 March 2001,

(b) a car that has low CO₂ emissions, or

(2) For the purposes of this section a car has low CO₂ emissions if it meets conditions A and B.

(3) Condition A is that, when the car is first registered, it is so registered on the basis of a qualifying emissions certificate.

(4) Condition B is that the applicable CO₂ emissions figure in relation to the car does not exceed 50 grams per kilometre driven.

(5) The Treasury may by order amend the amount from time to time specified in subsection (4).

(6) An order under subsection (5) may contain transitional provision and savings.

(7) In this section—

“applicable CO₂ emissions figure” and “qualifying emissions certificate” have the meanings given in section 268C;

“car” has the meaning given in section 268A;

“electrically-propelled” has the meaning given in section 268B.

104F

(1) This section applies if—

(a) a company (“the taxpayer”) has incurred special rate expenditure within section 104A(1)(e) (expenditure on a car other than a main rate car) to which section 104C applies (allocation to special rate pool),

(b) the qualifying activity carried on by the taxpayer is permanently discontinued, and

(2) Condition A is that the qualifying activity carried on by the taxpayer consisted of or included (other than incidentally) making cars available to other persons.

(3) Condition B is that, at any time in the 6 months after the taxpayer's qualifying activity is permanently discontinued, the qualifying activity of a group relief company consists of or includes (other than incidentally) making cars available to other persons.

(4) Condition C is that the balancing allowance (“SBA”) to which the taxpayer would be entitled (but for this section) in respect of the special rate pool is greater than—

$$BC–OBA$where—BC is the total of the balancing charges (if any) to which the taxpayer is liable for the final chargeable period in respect of any pool, andOBA is the total of the balancing allowances to which the taxpayer is entitled for that period in respect of any pool other than the special rate pool.$

For the purposes of this section if BC–OBA is a negative amount it is to be treated as if it were nil.

(5) The balancing allowance to which the taxpayer is entitled in respect of the special rate pool is reduced to an amount equal to BC–OBA.

(6) The relevant company is to be treated as having incurred qualifying expenditure within section 104A(1)(e) (“notional expenditure”), whether or not the relevant company owns cars previously owned by the taxpayer.

(7) The amount of the notional expenditure is an amount equal to the amount by which SBA exceeds BC–OBA.

(8) The relevant company is to be treated as having incurred the notional expenditure on the day after the end of the taxpayer's final chargeable period.

(9) If part of the chargeable period in which the relevant company is treated as incurring expenditure under this section (“the acquisition period”) overlaps with the taxpayer's penultimate chargeable period—

(a) the part of the expenditure which is proportional to that part of the acquisition period is not to be taken into account in determining the relevant company's available qualifying expenditure for the acquisition period, but

(b) this does not prevent that part of the expenditure being taken into account in determining the relevant company's available qualifying expenditure for any subsequent chargeable period.

(10) In this section—

“car” has the meaning given in section 268A;

“company” means any body corporate;

“group relief company” means—a company to which group relief under Part 5 of CTA 2010 would be available (on the making of a claim) in respect of balancing allowances surrendered by the taxpayer in the taxpayer's final chargeable period, anda company to which such relief would be available (on the making of a claim) in respect of balancing allowances surrendered by a company within paragraph (a);

“main rate car” has the meaning given in section 104AA;

“penultimate chargeable period” means the chargeable period preceding the final chargeable period;

“the relevant company” means the group relief company mentioned in subsection (3) or, if there is more than one, the one—nominated by the taxpayer not more than 6 months after the end of the taxpayer's final chargeable period, orin the absence of such a nomination, nominated by Her Majesty's Revenue and Customs.

Cases where allowances are prohibited

Writing-down allowances at 10%

Expenditure treated as incurred for purposes of mineral extraction trade

Meaning of “offshore infrastructure”

Meaning of “decommissioning expenditure”

Exceptions to section 161C(2)

Ring fence trade a separate qualifying activity

General decommissioning expenditure incurred before cessation of ring fence trade

Decommissioning services supplied by connected person

Equipment lessors

Purchaser of land discharging obligations of client under energy services agreement

Writing off initial allowances

Balancing adjustment on ending of concession

208A

(1) This section applies if—

(a) a disposal value is required to be brought into account under section 61,

(b) the disposal event is that the person ceases to own a section 206 car because of a sale or the performance of a contract, and

(c) allowances under this Part in respect of the person's expenditure under that transaction are restricted under section 217 or 218 (anti-avoidance).

(2) A car is a section 206 car if expenditure on the provision of the car is required to be allocated to a single asset pool under that section.

(3) The disposal value to be brought into account is—

(a) the market value of the car at the time of the disposal event, or

(b) if less, the capital expenditure incurred, or treated as incurred, on the provision of the car by the person disposing of it.

(4) The person acquiring the car is to be treated as having incurred capital expenditure on its provision of an amount equal to the disposal value required to be brought into account under subsection (3).

(5) In this section “car” has the meaning given in section 268A.

Application of section 303 where developer involved

229A

(1) This section applies where—

(a) a person (“S”) transfers plant or machinery to another person (“B”),

(b) at any time after the date of the transfer, the plant or machinery is available to be used by S, or a person (other than B) who is connected with S (“CS”),

(c) it is available to be so used under a contract which provides that S or CS is to or may become the owner of the plant or machinery on the performance of the contract, and

(d) S or CS incurs capital expenditure on the provision of the plant or machinery under that contract.

(2) No annual investment allowance or first-year allowance is to be made in respect of the expenditure of S or CS under the contract.

(3) The amount, if any, by which E exceeds D is to be left out of account in determining the available qualifying expenditure of S or CS.

(4) E is the capital expenditure of S or CS on the provision of the plant or machinery under the contract referred to in subsection (1)(c).

(5) If S is required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), D is that disposal value.

(5A) D is nil if—

(a) S is not required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), and

(b) at any time before that transfer S or a linked person became owner of the plant or machinery without incurring either capital expenditure or qualifying revenue expenditure on its provision.

(6) Otherwise, D is whichever of the following is the smallest—

(a) the market value of the plant or machinery;

(b) if S incurred capital expenditure on the provision of the plant or machinery before the transfer referred to in subsection (1)(a), the amount of that expenditure;

(c) if a person connected with S incurred capital expenditure on the provision of the plant or machinery before that transfer, the amount of that expenditure.

(7) Sections 214 and 215 do not apply in relation to the contract referred to in subsection (1)(c).

(8) Section 70Y(3) applies to references in this section to a transfer of plant or machinery by a person.

(9) For the purposes of this section a transfer involving the grant of a lease takes place on the commencement of the term of the lease.

(10) Linked person”, in relation to plant or machinery, means a person—

(a) who owned the plant or machinery at any time before the transfer referred to in subsection (1)(a), and

(b) who was connected with S at any time between—

(i) the time when the person became owner of the plant or machinery, and

(ii) the time of the transfer referred to in subsection (1)(a).

(11) Expenditure on the provision of plant or machinery is “qualifying revenue expenditure” if it is expenditure of a revenue nature—

(a) that is at least equal to the amount of expenditure that would reasonably be expected to have been incurred on the provision of the plant or machinery in a transaction between persons dealing with each other at arm's length in the open market, or

(b) that is incurred by the manufacturer of the plant or machinery and is at least equal to the amount that it would have been reasonable to expect to have been the normal cost of manufacturing the plant or machinery.

Cars etc

268A

(1) In this Part “car” means a mechanically propelled road vehicle other than—

(a) a motor cycle,

(b) a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or

(2) In this Part “motor cycle” has the meaning given by section 185(1) of the Road Traffic Act 1988.

268B

For the purposes of this Part a vehicle is electrically-propelled only if—

(a) it is propelled solely by electrical power, and

(b) that power is derived from—

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Capital Allowances Act 2001

References to sale of property and time of sale

Meaning of “control”

Section 411 (exclusion of double allowance)

Section 70A (Case V income from land outside UK: corporation tax)

Section 70A (Case V income from land outside UK: corporation tax)

Section 37 (consideration chargeable to tax on income)

Section 195 (allowance of certain drilling expenditure)

Section 411 (exclusion of double allowance)

Section 487 (credit unions)

Section 43 (interpretation of sections 41 and 42)

Section 525 (capital sums: death, winding up or partnership change)

Schedule 17 (Northern Ireland electricity)

Schedule 10 (furnished accommodation)

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

Schedule 24 (provisions relating to the Railways Act 1993)

Schedule 24 (provisions relating to the Railways Act 1993)

Schedule 25 (Northern Ireland Airports Limited)

Schedule 4 (taxation provisions)

Schedule 3 (taxation provisions)

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

Schedule 26 (transfers: tax)

Schedule 18 (company tax returns, assessments and related matters)

Schedule 33 (taxation)

Schedule 26 (transfers: tax)

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

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

Purchaser of land giving consideration for fixture

Anti-avoidance

Calculation of amount after relevant event

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

Schedule 12 (provision of services through an intermediary)

Section 93 (use of currency other than sterling)

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

Schedule 4 (taxation provisions)

Schedule 22 (tonnage tax)

Section 151 (benefits under pilot schemes)

Schedule 12 (leasing arrangements: finance leases and loans)

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

Meaning of “overseas leasing”

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

Meaning of “overseas leasing”

Meaning of “chargeable period”

Production animals etc.

Exclusion where sums payable in respect of depreciation

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

Energy-saving components of plant or machinery

Expenditure on cars with low carbon dioxide emissions

Expenditure on plant or machinery for gas refuelling station

Restriction of qualifying expenditure

Introduction

Single ship pool

Pre-trading expenditure on mineral exploration and access

Expenditure related to reuse etc. qualifies for writing-down allowances

Additional VAT rebates and writing off qualifying expenditure

Determination of entitlement or liability

Section 57 (regulations about appeals)

Schedule 12 (building societies: change of status)

Introduction

Giving effect to allowances and charges: trades

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

Schedule 3 (taxation provisions)

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

Section 195 (allowance of certain drilling expenditure)

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

Schedule 26 (transfers: tax)

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

The writing-down period

Questions to which procedure in section 563 applies

Tax agreements for income tax purposes

Schedule 3 (rules for assigning proceedings to General Commissioners)

Election to treat sale as being for alternative amount

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

Orders and regulations

Section 518 (harbour reorganisation schemes)

570B

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