Change 1 Article Choose an article Title and introductory text 1 Capital allowances 1A Capital allowances and charges: cash basis 2 General means of giving effect to capital allowances 3 Claims for capital allowances 4 Capital expenditure 5 When capital expenditure is incurred 6 Meaning of “chargeable period” 6A “NIRE company” and “SME (Northern Ireland employer) company” 6B “Northern Ireland firm” etc 6C “NI rate activity” 6D NI rate activity treated as separate trade 6E Giving effect to allowances and charges: NI rate activity cases 7 No double allowances 8 No double relief through pooling under Part 2 (plant and machinery allowances) 9 Interaction between fixtures claims and other claims 10 Interpretation 11 General conditions as to availability of plant and machinery allowances 12 Expenditure incurred before qualifying activity carried on 13 Use for qualifying activity of plant or machinery provided for other purposes 13A Use for other purposes of plant or machinery previously used for long funding leasing 13B Use for other purposes of plant or machinery: property businesses 14 Use for qualifying activity of plant or machinery which is a gift 15 Qualifying activities 16 Ordinary UK property businesses 17 UK furnished holiday lettings businesses 17A Ordinary overseas property business 17B EEA furnished holiday lettings businesses 18 Managing the investments of a company with investment business 19 Special leasing of plant or machinery 20 Employments and offices 21 Buildings 22 Structures, assets and works 23 Expenditure unaffected by sections 21 and 22 24 Interests in land 25 Building alterations connected with installation of plant or machinery 26 Demolition costs 27 Application of Part to thermal insulation and personal security 28 Thermal insulation of ... buildings 29 Fire safety 30 Safety at designated sports grounds 31 Safety at regulated stands at sports grounds 32 Safety at other sports grounds 33 Personal security 33A Expenditure on provision or replacement of integral features 33B Meaning of “replacement” in section 33A 34 Expenditure by MPs and others on accommodation 34A Expenditure on plant or machinery for long funding leasing not qualifying expenditure 35 Expenditure on plant or machinery for use in dwelling-house not qualifying expenditure in certain cases 36 Restriction on qualifying expenditure in case of employment or office 37 Exclusion where sums payable in respect of depreciation 38 Production animals etc. 38ZA Vehicles for which deductions allowed at fixed rate under Part 2 of ITTOIA 2005 38A AIA qualifying expenditure 38B General exclusions applying to section 38A 39 First-year allowances available for certain types of qualifying expenditure only 40 Expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises 41 Miscellaneous exclusions from section 40 (expenditure for Northern Ireland purposes etc.) 42 Exclusion of plant or machinery partly for use outside Northern Ireland 43 Effect of plant or machinery subsequently being primarily for use outside Northern Ireland 44 Expenditure incurred by small or medium-sized enterprises 45 ICT expenditure incurred by small enterprises 45D Expenditure on cars with low carbon dioxide emissions 45DA Expenditure on zero-emission goods vehicles 45DB Exclusions from allowances under section 45DA 45E Expenditure on plant or machinery for gas refuelling station 45EA Expenditure on plant or machinery for electric vehicle charging point 45F Expenditure on plant and machinery for use wholly in a ring fence trade 45G Plant or machinery used for less than five years in a ring fence trade 45K Expenditure on plant and machinery for use in designated assisted areas 45L Exclusion of plant or machinery partly for use outside designated assisted areas 45M Exclusions from allowances under section 45K 45N Effect of plant or machinery subsequently being primarily for use outside designated assisted areas 45O Expenditure on plant and machinery for use in special tax sites 45P Power to amend conditions 45Q Exclusion of plant or machinery partly for use outside special tax sites 45R Effect of failing to comply with ongoing requirements 45S Expenditure on plant or machinery in other cases 45T Exclusion of expenditure incurred under disqualifying arrangements 45U Expenditure on plant or machinery in cases not falling with section 45S etc 45V Exclusion of expenditure incurred under disqualifying arrangements 46 General exclusions ... 47 Expenditure of small or medium-sized enterprises: companies 48 Expenditure of small or medium-sized enterprises: businesses 49 Whether company is a member of a large or medium-sized group 50 Time when expenditure is incurred 51 Disclosure of information between UK tax authorities 51A Entitlement to annual investment allowance 51B First restriction: companies 51C Second restriction: groups of companies 51D Third restriction: groups of companies under common control 51E Fourth restriction: other companies under common control 51F Companies and groups: meaning of “control” 51G Companies and groups: meaning of “related” 51H Fifth restriction: qualifying activities under common control 51I Qualifying activities: meaning of control 51J Qualifying activity: meaning of “related” 51JA Sixth restriction: allocation where profits chargeable at NI rate 51K Operation of annual investment allowance where restrictions apply 51L Special provision for short chargeable periods 51M Special provision for long chargeable periods 51N Special provision for long chargeable periods: supplementary 52 First-year allowances 52A Prevention of double relief 53 Pooling of qualifying expenditure 54 The different kinds of pools 55 Determination of entitlement or liability 56 Amount of allowances and charges 56A Writing-down allowances for small pools 57 Available qualifying expenditure 58 Initial allocation of qualifying expenditure to pools 59 Unrelieved qualifying expenditure 59A Disposal of assets where first-year allowance made under section 45S for expenditure which is not special rate expenditure 59B Disposal of assets where first-year allowance made under section 45S for expenditure which is special rate expenditure 59C Sections 59A and 59B: tax avoidance arrangements 60 Meaning of “disposal receipt” and “disposal event” 61 Disposal events and disposal values 62 General limit on amount of disposal value 62A Cases in which disposal value is transition value 63 Cases in which disposal value is nil 64 Case in which no disposal value need be brought into account 64A Leased assets: arrangements reducing disposal value of asset 65 The final chargeable period 66 List of provisions outside this Chapter about disposal values 66A Persons leaving cash basis 66B SME company entering NI corporation tax regime 66C SME partnership entering NI corporation tax regime 66D SME company leaving NI corporation tax regime 66E SME partnership leaving NI corporation tax regime 67 Plant or machinery treated as owned by person entitled to benefit of contract, etc. 68 Disposal value on cessation of notional ownership 69 Hire-purchase etc. and fixtures 70 Plant or machinery provided by lessee 70A Entitlement to capital allowances 70B Long funding operating lease: amount of capital expenditure 70C Long funding finance lease: amount of capital expenditure 70D Long funding finance lease: additional expenditure: allowances for lessee 70DA Transfer and long funding leaseback: restrictions on lessee's allowances 70E Disposal events and disposal values 70F Introductory 70G “Long funding lease” 70H Lessee: requirement for tax return treating lease as long funding lease 70I “Short lease” 70J “Funding lease” 70K “Plant or machinery lease” 70L Plant or machinery leased with other assets: separate derived leases 70M Derived leases of plant or machinery: term and rentals 70N The finance lease test 70O The lease payments test 70P The useful economic life test 70Q Leases excluded by right of lessor etc to claim capital allowances 70R Excluded leases of background plant or machinery for a building 70S The disqualifications 70T Orders relating to background plant or machinery for a building 70U Plant or machinery leased with land: low percentage value 70V Tax avoidance involving international leasing 70W Transfers, assignments etc by lessor 70X Transfers, assignments etc by lessee 70Y Sale and leaseback, lease and leaseback etc: lessors 70YA Change in accountancy classification of long funding lease 70YB Long funding operating lease: extension of term of lease 70YC Extension of term of lease that is not a long funding lease 70YD Increase in proportion of residual amount guaranteed: review of status 70YE “Minimum lease payments” 70YF The “term” of a lease 70YG “Termination amount” 70YH “Termination value” 70YI General definitions 70YJ Power to vary the meaning of certain expressions 71 Software and rights to software 72 Disposal values 73 Limit on disposal values 74 Single asset pool 75 General limit on amount of writing-down allowance 76 Limit where part of expenditure met by another person 77 Car used partly for purposes other than those of qualifying activity 78 Effect of partial depreciation subsidy 79 Cases where Chapter 17 (anti-avoidance) applies 80 Vehicles provided for purposes of employment or office 81 Extended meaning of “car” 82 Qualifying hire cars 83 Meaning of “short-life asset” 84 Cases in which short-life asset treatment is ruled out 85 Election for short-life asset treatment: procedure 86 Short-life asset pool 87 Short-life assets provided for leasing 88 Sales at under-value 89 Disposal to connected person 90 Long-life asset expenditure 91 Meaning of “long-life asset” 92 Application of Chapter to part of expenditure 93 Fixtures etc. 94 Ships 95 Railway assets 96 Cars 97 Expenditure within the relevant monetary limit: general 98 Expenditure to which the monetary limits apply 99 The monetary limit 100 Exceeding the monetary limit 101 Allocation of long-life asset expenditure to pool 102 Writing-down allowance in respect of long-life asset expenditure 103 Later claims 104 Disposal value of long-life assets 104A Special rate expenditure 104AA Meaning of “main rate car” 104B Application of Chapter to part of expenditure 104C Special rate pool 104D Writing-down allowances at 6% or 10% 104E Disposal value of special rate assets 104F Special rate cars: discontinued activity continued by relevant company 104G Disposal events in respect of cushion gas 105 “Leasing”, “overseas leasing” etc. 106 The designated period 107 The overseas leasing pool 108 Effect of disposal to connected person on overseas leasing pool 109 Writing-down allowances at 10% 110 Cases where allowances are prohibited 111 Excess allowances: standard recovery mechanism 112 Excess allowances: connected persons 113 Excess allowances: special provision for ships 114 Prohibited allowances: standard recovery mechanism 115 Prohibited allowances: connected persons 116 Mitigation of regime 117 Recovery of allowances in case of joint lessees 118 Certificate relating to protected leasing 119 Notice of change of use of plant or machinery 120 Notice and joint lessees 121 Meaning of “short-term leasing” 122 Short-term leasing by buyer, lessee, etc. 123 Ships and aircraft 124 Transport containers 125 Other qualifying purposes 126 Minor definitions 127 Single ship pool 128 Expenditure which is not to be allocated to single ship pool 129 Election to use the appropriate non-ship pool 130 Notice postponing first-year or writing-down allowance 131 Effect of postponement 132 Disposal events and single ship pool 133 Ship not used 134 Deferment of balancing charges: introduction 135 Claim for deferment 136 Further conditions for deferment 137 Effect of deferment 138 Limit on amount deferred 139 Amount taken into account in respect of old ship 140 Notice attributing deferred amounts to new expenditure 141 Deferred amounts attributed to earlier expenditure first 142 Variation of attribution 143 Effect of attribution 144 Amounts which cease to be attributable 145 Requirement to notify where no entitlement to defer amounts 146 Basic meaning of expenditure on new shipping 147 Exclusions: ship previously owned 148 Exclusions: object to secure deferment 149 Exclusions: later events 150 Exclusions where expenditure not incurred by shipowner 151 Basic meaning of qualifying ship 152 Ships under 100 tons 153 Ships which are not qualifying ships 154 Further registration requirement 155 Change in the persons carrying on the qualifying activity 156 Connected persons 157 Adjustment of assessments etc. 158 Members of same group 159 Meaning of “mineral extraction trade” etc. 160 Expenditure treated as incurred for purposes of mineral extraction trade 161 Pre-trading expenditure on mineral exploration and access 161A Meaning of “offshore infrastructure” 161B Meaning of “decommissioning expenditure” 161C Expenditure related to reuse etc. qualifies for writing-down allowances 161D Exceptions to section 161C(2) 162 Ring fence trade a separate qualifying activity 163 Meaning of “general decommissioning expenditure” 163A Expenditure in anticipation of approval of abandonment programme 164 General decommissioning expenditure incurred before cessation of ring fence trade 165 General decommissioning expenditure after ceasing ring fence trade 165A Decommissioning services supplied by connected person 165B Restriction on allowance available 165C Allowance in respect of certain services related to decommissioning 165D Allowance where decommissioning undertaken for other participators in oil field 165E Transaction to obtain tax advantage 166 Transfers of interests in oil fields: anti-avoidance 167 Oil production sharing contracts 168 Expenditure on plant or machinery incurred by contractor 169 Expenditure on plant or machinery incurred by participator 170 Participator’s expenditure attributable to plant or machinery 171 Disposal values on cessation of ownership 172 Scope of Chapter etc. 172A Long funding leases etc: cases where this Chapter does not apply. 173 Meaning of “fixture” and “relevant land” 174 Meaning of “equipment lease” and “lease” 175 Meaning of “interest in land”, etc. 175A Meaning of “energy services agreement” 176 Person with interest in relevant land having fixture for purposes of qualifying activity 177 Equipment lessors 178 Equipment lessee has qualifying activity etc. 179 Equipment lessor has right to sever fixture that is not part of building 180 Equipment lease is part of affordable warmth programme 180A Energy services providers 181 Purchaser of land giving consideration for fixture 182 Purchaser of land discharging obligations of equipment lessee 182A Purchaser of land discharging obligations of client under energy services agreement 183 Incoming lessee where lessor entitled to allowances 184 Incoming lessee where lessor not entitled to allowances 185 Fixture on which a plant and machinery allowance has been claimed 186 Fixture on which an industrial buildings allowance has been made 186A Fixtures on which a business premises renovation allowance has been made 187 Fixture on which a research and development allowance has been made 187A Effect of changes in ownership of a fixture 187B Section 187A: supplementary provision 188 Cessation of ownership when person ceases to have qualifying interest 189 Identifying the qualifying interest in special cases 190 Cessation of ownership of lessor where section 183 applies 191 Cessation of ownership on severance of fixture 192 Cessation of ownership of equipment lessor 192A Cessation of ownership of energy services provider 193 Acquisition of ownership by lessor or licensor on termination of lease or licence 194 Acquisition of ownership by assignee of equipment lessor 195 Acquisition of ownership by equipment lessee 195A Acquisition of ownership by assignee of energy services provider 195B Acquisition of ownership by client 196 Disposal values in relation to fixtures: general 197 Disposal values in avoidance cases 198 Election to apportion sale price on sale of qualifying interest 199 Election to apportion capital sum given by lessee on grant of lease 200 Elections under sections 198 and 199: supplementary 201 Elections under sections 198 and 199: procedure 202 Interpretation 203 Amendment of returns etc. 204 Appeals etc. 205 Reduction of annual investment allowance and first-year allowances 206 Single asset pool etc. 207 Reduction of allowances and charges on expenditure in single asset pool 208 Effect of significant reduction in use for purposes of qualifying activity 208A Cars: disposal value in avoidance cases 209 Meaning of “partial depreciation subsidy” 210 Reduction of annual investment allowance and first-year allowances 211 Single asset pool etc. 212 Reduction of allowances and charges on expenditure in single asset pool 212ZA Apportionment of expenditure incurred partly for NI rate activity 212ZB Single asset pool etc 212ZC Allowances and charges on expenditure in single asset pool 212ZD Effect of significant change in balance of use 212ZE Application of Chapter to partnerships 212ZF “Main rate activity” 212A Scope of Chapter 212B Where Chapter applies 212C When there is qualifying change in relation to C 212D Guide to sections explaining section 212C 212E Principal companies 212F When company is owned by consortium and consortium members 212G Qualifying 75% subsidiaries 212H Ownership proportion 212I Relevant percentage share 212J Relevant excess of allowances 212K Relevant tax written-down value 212L Balance sheet value 212LA Limiting conditions 212M Unallowable purpose 212N Old and new accounting periods 212O When there is excess of allowances in pool: amount of excess 212P Effect of excess of allowances on pools 212Q When there are postponed capital allowances 212R Apportionment of proceeds of disposal of relevant plant and machinery 212S Transactions on relevant day 212T Cap on first-year allowances: zero-emission goods vehicles 212U Cap on first-year allowances: expenditure on plant and machinery for use in designated assisted areas 213 Relevant transactions: sale, hire-purchase (etc.) and assignment 214 Connected persons 215 Transactions to obtain tax advantages 216 Sale and leaseback, etc. 217 No annual investment allowance or first-year allowance for B’s expenditure 218 Restriction on B’s qualifying expenditure: section 214 or 216 218ZA Restrictions on writing-down allowances: section 215 218ZB Disposal values: section 215 218A Further restriction on annual investment allowance 219 Meaning of “finance lease” 220 Allocation of expenditure to a chargeable period 221 Meaning of “sale and finance leaseback” 222 Disposal value restricted 223 No first-year allowance for B’s expenditure 224 Restriction on B’s qualifying expenditure 225 B’s qualifying expenditure if lessor not bearing non-compliance risk 226 Qualifying expenditure limited in subsequent transactions 227 Sale and leaseback: election for special treatment 228 Effect of election: relaxation of restriction on B’s qualifying expenditure, etc. 228A Application of sections 228B and 228C 228B S's income or profits etc: deductions 228C S's income or profits: termination of leaseback 228D Lessor’s income or profits 228E Lessor’s income or profits: termination of leaseback 228F Lease and finance leaseback 228G Leaseback not accounted for as finance lease in S's accounts 228H Sections 228A to 228G: supplementary 228J Plant or machinery subject to further operating lease 228K Disposal of plant or machinery subject to lease where income retained 228L Determining the net present value of the rentals for purposes of s.228K 228M Other definitions for the purposes of s.228K 228MA Restriction of qualifying expenditure 228MB Calculation of present value 228MC Rental rebate 229 Hire-purchase etc. 229A Transfer followed by hire-purchase etc: restrictions on hirer's allowances 230 Exception for manufacturers and suppliers 231 Adjustments of assessments etc. 232 Meaning of connected person 233 Additional VAT liabilities and rebates 234 Introduction 235 Additional VAT liability treated as qualifying expenditure 236 Additional VAT liability generates first-year allowance or annual investment allowance 237 Exceptions to section 236 238 Additional VAT rebate generates disposal value 239 Limit on disposal value where additional VAT rebate 240 Additional VAT liability 241 No annual investment allowance or first-year allowance in respect of additional VAT liability 242 Restriction on B’s qualifying expenditure: general 243 Restriction on B’s qualifying expenditure: sale and finance leaseback 244 B’s qualifying expenditure if lessor not bearing non-compliance risk 245 Effect of election under section 227 on additional VAT liability 246 Miscellaneous 247 Trades 248 ...UK property businesses 249 UK furnished holiday lettings businesses 250 ... Overseas property businesses 250A EEA furnished holiday lettings businesses 251 Professions and vocations 252 Mines, transport undertakings etc. 253 Companies with investment business 254 Introductory 255 Apportionment of allowances and charges 256 Different giving effect rules for BLAGAB 257 Supplementary 258 Special leasing: income tax 259 Special leasing: corporation tax (general) 260 Special leasing: corporation tax (excess allowance) 261 Special leasing: long-term business 261A Special leasing: leasing partnerships 262 Employments and offices 262A First-year tax credits 262AA Co-ownership schemes: carrying on qualifying activity 262AB Co-ownership schemes: election 262AC Co-ownership schemes: calculation of allowance after election 262AD Co-ownership schemes: effect of election for participants 262AE Co-ownership schemes: effect of election for purchasers 262AEA Co-ownership authorised contractual schemes: withdrawal of election 262AF Co-ownership schemes: definitions relating to schemes 263 Qualifying activities carried on in partnership 264 Partnership using property of a partner 265 Successions: general 266 Election where predecessor and successor are connected persons 267 Effect of election 267A Restriction on effect of election 268 Successions by beneficiaries 268A Meaning of “car” and “motor cycle” 268B Electrically-propelled vehicles 268C Terms relating to emissions 268D Hire cars for disabled persons 268E Meaning of “assigns” 269 Use of plant or machinery for business entertainment 270 Shares in plant or machinery 270AA Structures and buildings allowances 270AB Date on which construction begins 270BA Meaning of “qualifying expenditure” 270BB Capital expenditure incurred on construction 270BC Sale of unused buildings or structures (other than by a developer) 270BD Sale by a developer: unused buildings or structures 270BE Sale by a developer: used buildings or structures 270BF Meaning of references to carrying on trade as a developer 270BG Acquisition or alteration of land etc 270BH Market value rule 270BI Provision of plant or machinery 270BJ Expenditure on renovation, conversion or incidental repairs 270BK Preparation of sites 270BL Apportionment of sums partly referable to non-qualifying assets 270BM Evidence of the amount of expenditure 270BN Expenditure incurred before qualifying activity carried on 270BNA Meaning of “special tax site qualifying expenditure” 270BNB Apportionment 270BNC Power to amend meaning of “special tax site qualifying expenditure” etc 270CA Qualifying activities 270CB Property businesses 270CC Foreign permanent establishments 270CD Companies with investment business 270CE Qualifying use 270CF Exclusion: residential use 270CG Use for the purposes of a property business 270DA General rule as to what is the relevant interest 270DB Interest acquired on completion of construction 270DC Effect of creation of subordinate interest 270DD Leases granted for 35 years or more 270DE Merger of leasehold interest 270EA Proportionate adjustment in certain cases 270EB Multiple uses 270EC Research and development 270FA Carrying on of highway undertakings 270FB The relevant interest 270FC Cases where highway concession is to be treated as extended 270GA Introduction 270GB Additional VAT liabilities 270GC Additional VAT rebates 270GD Adjustment for pre-April 2020 allowance 270HA Trades 270HB ... UK property businesses and ... overseas property businesses 270HC Professions and vocations 270HD Mines, transport undertakings etc 270HE Companies with investment business 270HF Application of sections 270HG and 270HH 270HG Apportionment of allowances 270HH Different giving effect rules for BLAGAB 270HI Supplementary 270IA Evidence of qualifying expenditure etc 270IB Anti-avoidance: general 270IC Co-ownership schemes: carrying on qualifying activity 270ID Co-ownership schemes: election 270IE Co-ownership schemes: calculation of allowance after an election 270IF Co-ownership schemes: definitions relating to schemes 270IG Treatment of leases 270IH Meaning of “lease” etc 271 Industrial buildings allowances 272 Expenditure on the construction of a building 273 Preparation of sites for plant or machinery 274 Trades and undertakings which are “qualifying trades” 275 Building used for welfare of workers 276 Parts of trades and undertakings 277 Exclusion of dwelling-houses, retail shops, showrooms, hotels and offices etc. 278 Building used by more than one licensee 279 Qualifying hotels 280 Qualifying sports pavilions 281 Commercial buildings (enterprise zones) 282 Buildings outside the United Kingdom 283 Non-industrial part of building disregarded 284 Roads on industrial estates etc. 285 Cessation of use and temporary disuse of building 286 General rule as to what is the relevant interest 287 Interest acquired on completion of construction 288 Effect of creation of subordinate interest 289 Merger of leasehold interest 290 Election to treat grant of lease exceeding 50 years as sale 291 Supplementary provisions with respect to elections 292 Meaning of “qualifying expenditure” 293 Meaning of references to carrying on a trade as a developer 294 Capital expenditure on construction of a building 295 Purchase of unused building where developer not involved 296 Purchase of building which has been sold unused by developer 297 Purchase of used building from developer 298 The time limit for qualifying enterprise zone expenditure 299 Application of section 294 300 Application of sections 295 and 296 301 Purchase of building within 2 years of first use 302 Qualifying enterprise zone expenditure where section 295 or 296 applies 303 Purchase of building within 2 years of first use 304 Application of section 303 where developer involved 305 Initial allowances for qualifying enterprise zone expenditure 306 Amount of initial allowance and period for which allowance made 307 Building not industrial building when first used etc. 308 Grants affecting entitlement to initial allowances 309 Entitlement to writing-down allowance 310 Basic rule for calculating amount of allowance 311 Calculation of allowance after sale of relevant interest 312 Allowance limited to residue of qualifying expenditure 313 Meaning of “the residue of qualifying expenditure” 313A Calculation of allowance after sale of relevant interest: anti-avoidance 314 When balancing adjustments are made 315 Main balancing events 316 Proceeds from main balancing events 317 Balancing event where hotel not qualifying hotel for 2 years 318 Building an industrial building etc. throughout 319 Building not an industrial building etc. throughout 320 Overall limit on balancing charge 321 The relevant period of ownership 322 Starting expenditure 323 Adjusted net cost 324 Net allowances 325 Balancing allowances restricted where sale subject to subordinate interest 326 Interpretation of section 325 327 Capital value provisions: application of provisions 328 Balancing adjustment on realisation of capital value 329 Capital value that is attributable to subordinate interest 330 Exception for payments more than 7 years after agreement 331 Capital value provisions: interpretation 332 Introduction 333 Writing off initial allowances 334 Writing off writing-down allowances 335 Writing off research and development allowances 336 Writing off expenditure when building not an industrial building 337 Writing off or increase of expenditure where balancing adjustment made 338 Writing off capital value which has been realised 339 Crown or other person not within the charge to tax entitled to the relevant interest 340 Treatment of demolition costs 341 Carrying on of highway undertakings 342 The relevant interest 343 Balancing adjustment on ending of concession 344 Cases where highway concession is to be treated as extended 345 Introduction 346 Additional VAT liabilities and initial allowances 347 Additional VAT liabilities and writing-down allowances 348 Additional VAT liabilities and writing off initial allowances 349 Additional VAT rebates and writing-down allowances 350 Additional VAT rebates and balancing adjustments 351 Additional VAT rebates and writing off qualifying expenditure 352 Trades 353 Lessors and licensors 354 Buildings temporarily out of use 355 Buildings for miners etc.: carry-back of balancing allowances 356 Apportionment of sums partly referable to non-qualifying assets 357 Arrangements having an artificial effect on pricing 358 Requisitioned land 359 Provisions applying on termination of lease 360 Meaning of “lease” etc. 360A Business premises renovation allowances 360B Meaning of “qualifying expenditure” 360BA Expenditure not treated as qualifying expenditure if delay in carrying out works etc 360C Meaning of “qualifying building” 360D Meaning of “qualifying business premises” 360E General rule as to what is the relevant interest 360F Interest acquired on completion of conversion 360G Initial allowances 360H Premises not qualifying business premises or relevant interest sold before premises first used or let 360I Entitlement to writing-down allowances 360J Amount of allowance 360K Meaning of “ the residue of qualifying expenditure ” 360L Grants affecting entitlement to allowances 360M When balancing adjustments are made 360N Balancing events 360O Proceeds from balancing events 360P Calculation of balancing adjustments 360Q Introduction 360R Writing off initial allowances and writing-down allowances 360S Treatment of demolition costs 360T Introduction 360U Additional VAT liabilities and initial allowances 360V Additional VAT liabilities and writing-down allowances 360W Additional VAT liabilities and writing off initial allowances 360X Additional VAT rebates and balancing adjustments 360Y Additional VAT rebates and writing off qualifying expenditure 360Z Giving effect to allowances and charges: trades 360Z1 Giving effect to allowances and charges: lessors and licensees 360Z2 Apportionment of sums partly referable to non-qualifying assets 360Z3 Provisions applying on termination of lease 360Z4 Meaning of “lease” etc. 361 Agricultural buildings allowances 362 Meaning of “husbandry” 363 Expenditure on the construction of a building 364 General rule as to what is the relevant interest 365 Effect of creation of subordinate lease 366 Interest conveyed or assigned by way of security 367 Merger of leasehold interest 368 Provisions applying on ending of lease 369 Capital expenditure on construction of agricultural building 370 Purchase of relevant interest before first use of agricultural building 371 Different relevant interests in different parts of the related agricultural land 372 Entitlement to writing-down allowance 373 Basic rule for calculating amount of allowance 374 First use of building not for purposes of husbandry, etc. 375 Effect of acquisition of relevant interest after first use of building 376 Calculation of allowance after acquisition 377 Chargeable period when balancing adjustment made 378 Allowance limited to residue of qualifying expenditure 379 Final writing-down allowance 380 When balancing adjustments are made 381 Balancing events (on making an election) 382 Requirements as to elections 383 Proceeds from balancing events 384 Exclusion of proportion of proceeds 385 Calculation of balancing adjustment 386 The residue of qualifying expenditure 387 Overall limit on balancing charge 388 Acquisition of relevant interest in part of land, etc. 389 Balancing allowances restricted where sale subject to subordinate interest etc. 390 Interpretation of section 389 391 Trades 392 UK property businesses 393 Meaning of “freehold interest”, “lease”, etc. 394 Mineral extraction allowances 395 Qualifying expenditure 396 Meaning of “mineral exploration and access” 397 Meaning of “mineral asset” 398 Relationship between main types of qualifying expenditure 399 Expenditure excluded from being qualifying expenditure 400 Qualifying expenditure on mineral exploration and access 401 Pre-trading exploration expenditure 402 Pre-trading expenditure on plant or machinery 403 Qualifying expenditure on acquiring a mineral asset 404 Exclusion of undeveloped market value of land 405 Qualifying expenditure where buildings or structures cease to be used 406 Reduction where premium relief previously allowed 407 Acquisition of mineral asset owned by previous trader 408 Acquisition of oil licence from non-trader 409 Acquisition of other assets from non-traders 410 UK oil licence: limit is original licence payment 411 Assets generally: limit is residue of previous trader’s qualifying expenditure 412 Transfers of mineral assets within group: limit is initial group expenditure 413 Transfers of mineral assets within group: supplementary 414 Expenditure on works likely to become valueless 415 Contribution to buildings or works for benefit of employees abroad 416 Non-ring fence trades: expenditure on restoration within 3 years of ceasing to trade 416ZA Ring fence trades: expenditure on site restoration 416ZB “Notional accounting period” 416ZC Site restoration services supplied by connected person 416ZD Restriction on allowance available 416ZE Allowance where site restoration undertaken for other participators in oil field 416A First-year allowances available for certain types of qualifying expenditure 416B Expenditure incurred by company for purposes of a ring fence trade 416C Time when expenditure is incurred 416D First-year allowances 416E Artificially inflated claims for first-year allowances 417 Determination of entitlement or liability 418 Amount of allowances and charges 419 Unrelieved qualifying expenditure 419A Unrelieved qualifying expenditure: entry to cash basis 420 Meaning of “disposal receipt” 421 Disposal of, or ceasing to use, asset 422 Use of asset otherwise than for permitted development etc. 423 Sections 421 and 422: amount of disposal value to be brought into account 424 Disposal value restricted in case of interest in land 425 Receipt of capital sum 426 Pre-trading expenditure 427 Giving up exploration, search or inquiry 428 Ceasing to work mineral deposits 429 Buildings etc. for benefit of employees abroad ceasing to be used 430 Disposal of asset, etc. 431 Discontinuance of trade 431A Foreign permanent establishment exemption 431B Disposal value: no allowance/no charge cases 431C Notional allowances 431D Persons leaving cash basis 432 Giving effect to allowances and charges 433 Treatment of demolition costs 434 Time when expenditure incurred 435 Shares in assets 436 Meaning of “development” etc. 437 Research and development allowances 438 Expenditure on research and development 439 Qualifying expenditure 439A Qualifying expenditure incurred for purposes of NI rate activity 440 Excluded expenditure: land 441 Allowances 442 Balancing charges 443 Disposal values and disposal events 444 Disposal events: chargeable period for which disposal value is to be brought into account 445 Costs of demolition 446 Introduction 447 Additional VAT liability treated as additional expenditure etc. 448 Additional VAT rebate generates disposal value 449 Effect on balancing charges of additional VAT rebates in earlier chargeable periods 450 Giving effect to allowances and charges 451 Sales: time of cessation of ownership 452 Know-how allowances 453 Know-how as property 454 Qualifying expenditure 455 Excluded expenditure 456 Pooling of expenditure 457 Determination of entitlement or liability 458 Amount of allowances and charges 459 Available qualifying expenditure 460 Allocation of qualifying expenditure to pools 461 Unrelieved qualifying expenditure 461A Unrelieved qualifying expenditure: entry to cash basis 462 Disposal values 462A Persons leaving cash basis 463 Giving effect to allowances and charges 464 Patent allowances 465 Future patent rights 466 Grant of licences 467 Qualifying expenditure 468 Qualifying trade expenditure 469 Qualifying non-trade expenditure 470 Pooling of expenditure 471 Determination of entitlement or liability 472 Amount of allowances and charges 473 Available qualifying expenditure 474 Allocation of qualifying expenditure to pools 475 Unrelieved qualifying expenditure 475A Unrelieved qualifying expenditure: entry to cash basis 476 Disposal value of patent rights 477 Limit on amount of disposal value 477A Persons leaving cash basis 478 Persons having qualifying trade expenditure 479 Persons having qualifying non-trade expenditure: income tax 480 Persons having qualifying non-trade expenditure: corporation tax 481 Anti-avoidance: limit on qualifying expenditure 482 Sums paid for Crown use etc. treated as paid under licence 483 Meaning of “income from patents” 484 Dredging allowances 485 Qualifying expenditure 486 Pre-trading expenditure of qualifying trades, etc. 487 Writing-down allowances 488 Balancing allowances 489 Giving effect to allowances 490 Assured tenancy allowances 491 Allowances available in relation to old expenditure only 492 Meaning of “approved body” 493 Expenditure on the construction of a building 494 Introduction 495 General rule as to what is the relevant interest in the building 496 Interest acquired on completion of construction 497 Effect of creation of subordinate interest 498 Merger of leasehold interest 499 Provisions applying on termination of lease 500 The relevant interest in the dwelling-house 501 Capital expenditure on construction 502 Purchase of unused dwelling-house where developer not involved 503 Purchase of dwelling-house sold unused by developer 504 Requirements relating to the landlord 505 Qualifying dwelling-houses: exclusions 506 Dwelling-house ceasing to be qualifying dwelling-house 507 Entitlement to writing-down allowance 508 Basic rule for calculating amount of allowance 509 Calculation of allowance after sale of relevant interest 510 Allowance limited to residue of qualifying expenditure attributable to dwelling-house 511 Qualifying expenditure attributable to dwelling-house 512 Residue of qualifying expenditure attributable to dwelling-house 513 When balancing adjustments are made 514 Balancing events 515 Proceeds from balancing events 516 Dwelling-house a qualifying dwelling-house throughout 517 Dwelling-house not a qualifying dwelling-house throughout 518 Overall limit on balancing charge 519 Recovery of old initial allowances made on incorrect assumptions 520 The relevant period of ownership 521 Starting expenditure 522 Adjusted net cost 523 Introduction 524 Writing off initial allowances 525 Writing off writing-down allowances 526 Writing off expenditure for periods when building not used as qualifying dwelling-house 527 Writing off or increase of expenditure where balancing adjustment made 528 Treatment of demolition costs 529 Giving effect to allowances and charges 530 Apportionment of sums partly referable to non-qualifying assets 531 Meaning of “dwelling-house”, “lease” etc. 532 The general rule excluding contributions 533 Exclusion of contributions to dredging 534 Northern Ireland regional development grants 535 Insurance or compensation money 536 Contributions not made by public bodies and not eligible for tax relief 537 Conditions for contribution allowances under Parts 2, 2A ... and 5 538 Plant and machinery 538A Buildings and structures 539 Industrial buildings 540 Agricultural buildings 541 Mineral extraction 542 Transfer of C’s trade ... 543 Contribution allowances under Part 9 544 Management assets 545 Investment assets 546 Introduction 547 “Additional VAT liability” and “additional VAT rebate” 548 Time when additional VAT liability or rebate is incurred or made 549 Chargeable period in which, and time when, additional VAT liability or rebate accrues 550 Apportionment of additional VAT liabilities and rebates 551 Supplementary 552 Meaning of “oil licence” and “interest in an oil licence” 553 Consideration to be treated as nil 554 Circumstances in which oil licence relates to undeveloped area 555 Disposal of oil licence with exploitation value 556 Minor definitions 557 Application of sections 558 and 559 558 Effect of partnership changes 559 Effect of successions 560 Transfer of insurance company business 560A Transfers of trade without a change of ownership 561 Transfer or division of UK business 561A Transfer of asset by reason of cross-border merger 562 Apportionment where property sold together 563 Procedure for determining certain questions affecting one or more persons 564 Questions to which procedure in section 563 applies 565 Tax agreements for income tax purposes 566 Companies not resident in the United Kingdom 567 Sales treated as being for alternative amount: introductory 568 Sales treated as being at market value 569 Election to treat sale as being for alternative amount 570 Elections: supplementary 570A Avoidance affecting proceeds of balancing event 570B Orders and regulations made by Treasury or Commissioners 571 Application of Act to parts of assets 572 References to sale of property and time of sale 573 Transfers treated as sales 573A Special tax sites 574 Meaning of “control” 575 Meaning of “connected” persons 575A Section 575: supplementary 576 Meaning of “the Inland Revenue” etc. 577 Other definitions 578 Consequential amendments 579 Commencement and transitional provisions and savings 580 Repeals 581 Citation Schedule 1 Abbreviations and defined expressions Schedule 2 Consequential amendments Schedule 3 Transitionals and savings Schedule 4 Repeals
What to do with it
As published
228MA Restriction of qualifying expenditure
(1) This section applies where capital expenditure is incurred on the provision of plant or machinery (“the asset”) and at the time the expenditure is incurred—
(a) the asset is leased or arrangements exist under which it is to be leased, and
(b) arrangements have been entered into in relation to payments under the lease that have the effect of reducing the value of the asset to the lessor (“V”).
(2) For the purposes of capital allowances the lessor's qualifying expenditure on the asset is restricted to V.
(3) The value of the asset to the lessor is given by—
V=VI+VR
where—
VI is the present value of the lessor's income from the asset, and
VR is the present value of the residual value of the asset reduced by the amount of any rental rebate.
(4) For this purpose—
(a) the lessor's income from the asset is the total of all the amounts that—
(i) have been received by the lessor, or it is reasonable to expect the lessor will receive, in connection with the lease, and
(ii) have been brought into account by the lessor, or it is reasonable to expect the lessor will bring into account, as income in computing profits chargeable to tax, and
(b) the residual value of the asset is what it is reasonable to expect will be the market value of the lessor's interest in the asset immediately after the termination of the lease.
(5) In determining the lessor's income from the asset, exclude—
(a) disposal receipts brought, or to be brought, into account under Part 2, and
(b) so much of any amount as represents charges for services or qualifying UK or foreign tax (within the meaning of section 70YE) to be paid by the lessor.
(6) Where capital expenditure has previously been incurred by the lessor on the provision of the asset, the reference in subsection (2) to the lessor's qualifying expenditure on the asset is to be read as a reference to the total amount of the lessor's qualifying expenditure on the asset.
(7) The following provisions supplement this section—
(a) section 228MB provides for the calculation of “present value”, and
(b) section 228MC defines what is meant by a rental rebate.
(8) In this section and sections 228MB and 228MC “lease” includes any arrangements which provide for plant or machinery to be leased or otherwise made available by a person (“the lessor”) to another person (“the lessee”).
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228MA Restriction of qualifying expenditure
(1) This section applies where capital expenditure is incurred on the provision of plant or machinery (“the asset”) and at the time the expenditure is incurred—
(a) the asset is leased or arrangements exist under which it is to be leased, and
(b) arrangements have been entered into in relation to payments under the lease that have the effect of reducing the value of the asset to the lessor (“V”).
(2) For the purposes of capital allowances the lessor's qualifying expenditure on the asset is restricted to V.
(3) The value of the asset to the lessor is given by—
V=VI+VR
where—
VI is the present value of the lessor's income from the asset, and
VR is the present value of the residual value of the asset reduced by the amount of any rental rebate.
(4) For this purpose—
(a) the lessor's income from the asset is the total of all the amounts that—
(i) have been received by the lessor, or it is reasonable to expect the lessor will receive, in connection with the lease, and
(ii) have been brought into account by the lessor, or it is reasonable to expect the lessor will bring into account, as income in computing profits chargeable to tax, and
(b) the residual value of the asset is what it is reasonable to expect will be the market value of the lessor's interest in the asset immediately after the termination of the lease.
(5) In determining the lessor's income from the asset, exclude—
(a) disposal receipts brought, or to be brought, into account under Part 2, and
(b) so much of any amount as represents charges for services or qualifying UK or foreign tax (within the meaning of section 70YE) to be paid by the lessor.
(6) Where capital expenditure has previously been incurred by the lessor on the provision of the asset, the reference in subsection (2) to the lessor's qualifying expenditure on the asset is to be read as a reference to the total amount of the lessor's qualifying expenditure on the asset.
(7) The following provisions supplement this section—
(a) section 228MB provides for the calculation of “present value”, and
(b) section 228MC defines what is meant by a rental rebate.
(8) In this section and sections 228MB and 228MC “lease” includes any arrangements which provide for plant or machinery to be leased or otherwise made available by a person (“the lessor”) to another person (“the lessee”).
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