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In force since 2026-05-01, as the publisher states.
Copy read on 2026-11-08. The page it was read from
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.
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A person’s entitlement to an allowance for a chargeable period is to a balancing allowance if— (a) the expenditure is qualifying expenditure under section 415 (contributions to buildings or works for benefit of employees abroad), and (b) in that chargeable period the buildings or works permanently cease to be used for the purposes of or in connection with the mineral extraction trade.
Propose a change(1) A person’s entitlement to an allowance for a chargeable period is to a balancing allowance if— (a) the qualifying expenditure was incurred on the provision of any assets, and (b) in that chargeable period any of those assets— (i) is disposed of, or (ii) otherwise permanently ceases to be used by him for the purposes of the mineral extraction trade. (2) A person’s entitlement to an allowance for a chargeable period is to a balancing allowance if any of the following events occurs in that chargeable period in relation to assets representing the qualifying expenditure— (a) the person loses possession of the assets in circumstances where it is reasonable to assume that the loss is permanent; (b) the assets cease to exist as such (as a result of destruction, dismantling or otherwise); (c) the assets begin to be used wholly or partly for purposes other than those of the mineral extraction trade carried on by the person.
Propose a changeA person’s entitlement to an allowance for a chargeable period is to a balancing allowance if in that chargeable period the mineral extraction trade is permanently discontinued.
Propose a change(1) Subsection (2) applies if— (a) an election under section 18A of CTA 2009 has effect in relation to a company, and (b) the company carries on any trade which consists of, or includes, the working of a source of mineral deposits. (2) That trade so far as carried on through one or more permanent establishments outside the United Kingdom is treated for the purposes of this Part as a trade— (a) separate from any other trade of the company, and (b) all the profits and gains from which are not, or (if there were any) would not be, chargeable to tax.
Propose a change(1) If— (a) an election under section 18A of CTA 2009 has effect in relation to a company, and (b) the operation of sections 431A and 421(1)(b)(ii) and (2) requires the company to bring the disposal value of an asset into account, the disposal value is such an amount as gives rise to neither a balancing allowance nor a balancing charge. (2) Subsection (1) does not apply if— (a) the company's qualifying expenditure in respect of the asset exceeds £5 million, (b) the company has claimed any capital allowance in respect of any of that expenditure, and (c) the company has, at any time in a relevant accounting period, used the asset otherwise than for the purposes of a permanent establishment outside the United Kingdom. (3) In subsection (2)(c) “relevant accounting period” means an accounting period ending before, but ending not more than 6 years before, “the relevant day” as defined by section 18F of CTA 2009.
Propose a change(1) Subsection (2) applies if— (a) an election under section 18A of CTA 2009 has effect in relation to a company, and (b) but for section 18A of CTA 2009 and section 431A(2)(b), an allowance under this Part (“the notional allowance”) could be claimed under section 3(1) in respect of assets provided for the purposes of a permanent establishment outside the United Kingdom through which business is or has been carried on by the company. (2) The notional allowance (and any charge in connection with it which would have arisen if the allowance had been claimed) is to be made automatically and reflected in any calculation, for any relevant accounting period of the company, of the profits or losses attributable to business carried on by the company through such a permanent establishment. (3) Subsection (4) applies if, at the time an election under section 18A of CTA 2009 takes effect in relation to a company, the company is, by reason of sections 431A and 421(1)(b)(ii) and (2), required to bring into account the disposal value of any asset provided for the purposes of a foreign permanent establishment through which business is or has been carried on by the company. (4) For the purposes of subsections (1) and (2), the company is treated as having incurred at that time, for the purposes of the trade mentioned in section 431A(2), qualifying expenditure of an amount equal to that disposal value. (5) In subsection (2) “relevant accounting period”, in relation to a company by which an election under section 18A of CTA 2009 is made, means an accounting period of the company to which the election applies (as to which see section 18F of that Act).
Propose a change(1) This section applies if— (a) a person carrying on a mineral extraction trade leaves the cash basis in a chargeable period, (b) the person has incurred expenditure at a time when the cash basis applies in relation to the trade, (c) some or all of the expenditure was brought into account in calculating the profits of the trade on the cash basis, and (d) the expenditure would have been qualifying expenditure if the cash basis had not applied at the time the expenditure was incurred. (2) In this section— (a) the “relieved portion” of the expenditure is the higher of the following— (i) the amount of that expenditure for which a deduction was allowed in calculating the profits of the trade, or (ii) the amount of that expenditure for which a deduction would have been so allowed if the expenditure had been incurred wholly and exclusively for the purposes of the trade; (b) the “unrelieved portion” of the expenditure is any remaining amount of the expenditure. (3) An amount of the expenditure equal to the amount (if any) by which the unrelieved portion of the expenditure exceeds the relieved portion of the expenditure is to be regarded as qualifying expenditure incurred by the person in the chargeable period. (4) For the purposes of this section a person carrying on a trade leaves the cash basis in a chargeable period if— (a) immediately before the beginning of the chargeable period the cash basis applied in relation to the trade, and (b) the cash basis does not apply in relation to the trade for the chargeable period. (4A) Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.
Propose a change(1) An allowance or charge to which a person is entitled or liable under this Part is to be given effect in calculating the profits of that person’s mineral extraction trade, by treating— (a) the allowance as an expense of the trade, and (b) the charge as a receipt of the trade. (2) This section is subject to section 6E (giving effect to allowances and charges: NI rate activity cases).
Propose a change(1) The net cost to a person of demolishing an asset which represents qualifying expenditure is added to that qualifying expenditure in determining the amount of any balancing allowance or balancing charge for the chargeable period in which the demolition occurs. (2) “The net cost of the demolition” means the amount, if any, by which the cost of the demolition exceeds any money received for the remains of the asset. (3) If this section applies, the net cost of the demolition is not treated as expenditure incurred on any other asset which replaces the demolished asset.
Propose a change(1) For the purposes of this Part, expenditure incurred for the purposes of a mineral extraction trade by a person about to carry it on is treated as incurred by that person on the first day on which that person does carry it on. (2) Subsection (1) does not apply to pre-trading expenditure on mineral exploration and access (for which specific provision is made by section 400(4)).
Propose a change(1) This Part applies in relation to a share in an asset as it applies (under section 571) in relation to a part of an asset. (2) For the purposes of those provisions, a share in an asset is treated as used for the purposes of a trade so long as, and only so long as, the asset is used for the purposes of the trade.
Propose a change(1) In this Part— “development” “development order”, “general development order”, and “planning permission”, have the meaning given by the relevant planning enactment. (2) “The relevant planning enactment” means— (a) in relation to land in England or Wales, section 336(1) of the Town and Country Planning Act 1990 (c. 8); (b) in relation to land in Scotland, section 277(1) of the Town and Country Planning (Scotland) Act 1997 (c. 8); (c) in relation to land in Northern Ireland, section 250(1) of the Planning Act (Northern Ireland) 2011.
Propose a change(1) Allowances are available under this Part if a person incurs qualifying expenditure on research and development. (2) In this Part “research and development”— (a) means activities that fall to be treated as research and development in accordance with generally accepted accounting practice, and (b) includes oil and gas exploration and appraisal. (3) But— (a) activities that, as a result of regulations made under section 1006 of ITA 2007, are “research and development” for the purposes of that section are also “research and development” for the purposes of this Part, and (b) activities that, as a result of any such regulations, are not “research and development” for the purposes of that section are also not “research and development” for the purposes of this Part.
Propose a change(1) Expenditure on research and development includes all expenditure incurred for— (a) carrying out research and development, or (b) providing facilities for carrying out research and development. (2) But it does not include expenditure incurred in the acquisition of— (a) rights in research and development, or (b) rights arising out of research and development. (3) Nor does it include expenditure on the provision of a dwelling. (4) But if— (a) part of a building consists of a dwelling and the rest of the building is used for research and development, and (b) no more than 25% of the capital expenditure referable to the construction or acquisition of the whole building is referable to the construction or acquisition of the dwelling, the whole of the building is to be treated as used for research and development. (5) For the purposes of subsection (4)(b), the expenditure referable to the construction or acquisition of the building is to be apportioned in a just and reasonable manner. (6) Any additional VAT liability or rebate (as to which see Chapter 4) is to be disregarded in applying subsection (4)(b).
Propose a change(1) In this Part “qualifying expenditure” means capital expenditure incurred by a person on research and development directly undertaken by him or on his behalf if— (a) he is carrying on a trade when the expenditure is incurred and the research and development relates to that trade, or (b) after incurring the expenditure he sets up and commences a trade connected with the research and development. (2) The same expenditure may not be taken into account as qualifying expenditure in relation to more than one trade. (3) The trade by reference to which expenditure is qualifying expenditure is referred to in this Part as “the relevant trade” in relation to that expenditure. (4) If capital expenditure is partly within subsection (1) and partly not, the expenditure is to be apportioned in a just and reasonable manner. (5) References in this Chapter to research and development related to a trade include— (a) research and development which may lead to or facilitate an extension of that trade, and (b) research and development of a medical nature which has a special relation to the welfare of workers employed in that trade.
Propose a change(1) Subsection (2) applies if— (a) a company that does not have a Northern Ireland regional establishment incurs expenditure for the purposes of a trade, (b) the activities for the purposes of which the expenditure is incurred would, if the company were a NIRE company, be an NI rate activity treated as a separate trade, and (c) the company subsequently becomes a NIRE company. (2) The expenditure is to be treated as incurred on the first day of the first chargeable period in which the company is a NIRE company. (3) Subsection (4) applies if— (a) a partnership that does not have a Northern Ireland regional establishment incurs expenditure for the purposes of a trade, (b) the activities for the purposes of which the expenditure is incurred would, if the partnership were a Northern Ireland Chapter 7 firm, be an NI rate activity treated as a separate trade, and (c) the partnership subsequently becomes a Northern Ireland Chapter 7 firm. (4) The expenditure is to be treated as incurred on the first day of the first chargeable period in which the partnership is a Northern Ireland Chapter 7 firm. (5) In this section “Northern Ireland regional establishment” has the same meaning as in Part 8B of CTA 2010 (see Chapter 5 of that Part as read, in relation to a partnership, with section 357WA(4) of that Act).
Propose a change(1) Expenditure on the acquisition of land, or rights in or over land, is not qualifying expenditure. (2) But that does not prevent such expenditure from being qualifying expenditure so far as it is referable to the acquisition of— (a) a building or structure already constructed on the land, (b) rights in or over such a building or structure, or (c) plant or machinery which forms part of such a building or structure. (3) For the purposes of subsection (2), the expenditure is to be apportioned in a just and reasonable manner.
Propose a change(1) A person who incurs qualifying expenditure is entitled to an allowance in respect of that expenditure for the relevant chargeable period equal to— (a) the amount of the qualifying expenditure, or (b) if a disposal value is required to be brought into account for that period in respect of that expenditure, the amount (if any) by which that expenditure exceeds the disposal value. (2) The relevant chargeable period is— (a) the chargeable period in which the expenditure is incurred, or (b) if the expenditure was incurred before the chargeable period in which the relevant trade is set up and commenced, that chargeable period. (3) A person claiming an allowance under this section may require the allowance to be reduced to a specified amount.
Propose a change(1) This section applies if— (a) an allowance is made to a person for a chargeable period in respect of qualifying expenditure, and (b) the person is required to bring a disposal value into account for a later chargeable period in respect of that expenditure. (2) The person is liable to a balancing charge for the later chargeable period in respect of the qualifying expenditure. (3) The amount of the balancing charge is— (a) the amount (if any) by which the disposal value to be brought into account for the period exceeds any unclaimed allowance, or (b) if less, the allowance made in respect of the qualifying expenditure. (4) “Unclaimed allowance” means any part of the allowance to which the person was entitled in respect of the qualifying expenditure but which has not been claimed. (5) This section is to be read with section 449 (effect on balancing charges of additional VAT rebates in earlier chargeable periods).
Propose a change(1) A person is required to bring a disposal value into account in respect of qualifying expenditure incurred by him if— (a) he ceases to own an asset representing the expenditure, or (b) an asset representing the expenditure is demolished or destroyed at a time when he owns the asset. (2) Subsection (1) is to be read with section 555 (disposal of oil licence with exploitation value). (3) But a person is not required to bring a disposal value into account under subsection (1) if the disposal event gives rise to a balancing charge under Part 2 ... (plant and machinery allowances ...). (4) The disposal value to be brought into account under subsection (1) depends on the disposal event, as shown in the Table— Table Disposal values 1. Disposal event | 2. Disposal value 1. Sale of the asset at not less than market value. | The net proceeds of the sale. 2. Demolition or destruction of the asset. | The net amount received for the remains of the asset, together with— (a) any insurance money received in respect of the demolition or destruction, and (b) any other compensation of any description so received, so far as it consists of capital sums. 3. Any event not falling within item 1 or 2. | The market value of the asset at the time of the event. (5) Subsection (4) is subject to— section 445 (costs of demolition), section 553 (nil value in case of disposal of oil licence relating to undeveloped area), and section 555 (disposal of oil licence with exploitation value). (6) A person is also required to bring a disposal value into account by section 448 (additional VAT rebate generates disposal value). (7) In this Chapter “disposal event” means an event of a kind that requires a disposal value to be brought into account under subsection (1).
Propose a change(1) The chargeable period for which a disposal value is to be brought into account under section 443(1) in respect of qualifying expenditure is given by this section. (2) Subsection (3) applies if the disposal event occurs in or after the chargeable period for which the allowance in respect of the expenditure is made. (3) The disposal value is to be brought into account for— (a) the chargeable period in which the event occurs, or (b) if the event occurs after the chargeable period in which the relevant trade is permanently discontinued, that chargeable period. (4) If the disposal event occurs before the chargeable period for which the allowance in respect of the expenditure is made, the disposal value is to be brought into account for that chargeable period.
Propose a change(1) This section applies if— (a) an asset representing qualifying expenditure incurred by a person is demolished at a time when the person owns the asset, and (b) the person incurred costs of demolition. (2) The disposal value which the person is required to bring into account in respect of the qualifying expenditure is to be reduced by the cost to the person of the demolition. (3) If the amount of the disposal value is reduced to nil (or less than nil) under subsection (2), the person is not required to bring a disposal value into account. (4) If— (a) the cost to the person of the demolition exceeds the disposal value, and (b) before its demolition the asset had not begun to be used for purposes other than research and development related to the relevant trade, the person is to be treated as incurring qualifying expenditure equal to the excess. (5) That qualifying expenditure is to be treated as incurred— (a) when the demolition occurs, or (b) if that is on or after the date on which the relevant trade is permanently discontinued, immediately before the discontinuance. (6) If this section applies, the cost to the person of the demolition is not to be treated for the purposes of this Act as expenditure on any property that replaces the demolished asset.
Propose a changeFor the purposes of this Chapter— (a) “additional VAT liability” and “additional VAT rebate” have the meaning given by section 547, (b) the time when— (i) a person incurs an additional VAT liability, or (ii) an additional VAT rebate is made to a person, is given by section 548, and (c) the chargeable period in which, and the time when, an additional VAT liability or an additional VAT rebate accrues are given by section 549.
Propose a change(1) If a person— (a) has incurred qualifying expenditure (“the original expenditure”), and (b) incurs an additional VAT liability in respect of that expenditure, the liability is to be treated as capital expenditure incurred on the same research and development as the original expenditure. (2) But subsection (1) does not apply if by the time the liability is incurred— (a) the person who incurred the original expenditure has ceased to own the asset representing that expenditure, or (b) that asset has been demolished or destroyed. (3) Any allowance arising as a result of this section is available for— (a) the chargeable period in which the liability accrues, or (b) if the liability accrued before the chargeable period in which the relevant trade is set up and commenced, that chargeable period, rather than for the relevant chargeable period specified in section 441(2).
Propose a change(1) This section applies if— (a) a person has incurred qualifying expenditure, and (b) an additional VAT rebate is made to the person in respect of that expenditure. (2) But this section does not apply if by the time the rebate is made— (a) the person has ceased to own the asset representing that expenditure, or (b) that asset has been demolished or destroyed. (3) And this section does not apply if the rebate falls to be brought into account for the purpose of making allowances and charges under Part 2 ... (plant and machinery allowances ...). (4) The person must bring the amount of the rebate into account— (a) as a disposal value in respect of the qualifying expenditure for the appropriate chargeable period, or (b) if the person would have to bring a disposal value into account under section 443(1) in respect of that expenditure for that chargeable period, as an addition to that disposal value. (5) “Appropriate chargeable period” means— (a) the chargeable period in which the rebate accrues, or (b) if the rebate accrued before the chargeable period in which the relevant trade is set up and commenced, that chargeable period.
Propose a change(1) Section 442 (balancing charges) has effect subject to this section if— (a) an allowance is made to a person for a chargeable period (“the original period”) in respect of qualifying expenditure, (b) the person is required to bring a disposal value into account for a later chargeable period in respect of that expenditure, and (c) the person has been required by section 448(4)(a) to bring one or more disposal values (“VAT disposal values”) into account in respect of that expenditure for one or more chargeable periods after the original period but before the later chargeable period. (2) In relation to the later chargeable period, subsection (3)(a) of section 442 applies as if the unclaimed allowance were reduced by— DV - BC where— DV is the total amount of the VAT disposal values, and BC is the total amount of any balancing charges to which the person is liable under that section as a result of bringing into account the VAT disposal values. (3) In relation to the later chargeable period, subsection (3)(b) of section 442 applies as if the allowance made in respect of the qualifying expenditure were reduced by BC.
Propose a change(1) An allowance or charge to which a person is entitled or liable under this Part for a chargeable period is to be given effect in calculating the profits of the relevant trade, by treating— (a) the allowance as an expense of the trade, and (b) the charge as a receipt of the trade. (2) This section is subject to section 6E (giving effect to allowances and charges: NI rate activity cases).
Propose a changeAny reference in this Part to the time when a person ceases to own an asset is to be read, in the case of a sale, as a reference to whichever is the earlier of— (a) the time of completion, and (b) the time when possession is given.
Propose a change(1) Allowances are available under this Part if a person incurs qualifying expenditure on the acquisition of know-how. (2) In this Part “know-how” means any industrial information or techniques likely to assist in— (a) manufacturing or processing goods or materials, (b) working a source of mineral deposits (including searching for, discovering or testing mineral deposits or obtaining access to them), or (c) carrying out any agricultural, forestry or fishing operations. (3) In subsection (2)(b)— (a) “mineral deposits” includes any natural deposits capable of being lifted or extracted from the earth and for this purpose geothermal energy is to be treated as a natural deposit, and (b) “source of mineral deposits” includes a mine, an oil well and a source of geothermal energy.
Propose a change(1) Know-how is to be treated as property for the purposes of this Act. (2) References in this Act to the purchase or sale of property include the acquisition or disposal of know-how.
Propose a change(1) In this Part “qualifying expenditure” means, subject to section 455, capital expenditure incurred on the acquisition of know-how by a person if— (a) the person is carrying on a trade at the time of the acquisition and the know-how is acquired for use in that trade, (b) the person acquires the know-how and subsequently sets up and commences a trade in which it is used, (c) the person acquires the know-how together with the trade or part of a trade in which it was used and the parties to the acquisition make an election under section 194 of ITTOIA 2005 or under section 178 of CTA 2009 (consideration for know-how on disposal of trade to be treated as payment for goodwill unless parties otherwise elect), or (d) the person acquires the know-how together with the trade or part of a trade in which it was used and the trade in question was, before the acquisition, carried on wholly outside the United Kingdom. (2) The same expenditure may not be taken into account as qualifying expenditure in relation to more than one trade. (3) Qualifying expenditure incurred before the setting up and commencement of the relevant trade is to be treated for the purposes of this Part as incurred when the trade is set up and commenced. (4) “Relevant trade” means the trade by reference to which expenditure is qualifying expenditure.
Propose a change(1) Expenditure on the acquisition of know-how is not qualifying expenditure to the extent that it is otherwise deducted for tax purposes. (2) Expenditure on the acquisition of know-how is not qualifying expenditure if— (a) the buyer is a body of persons over whom the seller has control, (b) the seller is a body of persons over whom the buyer has control, or (c) the buyer and the seller are both bodies of persons and another person has control over both of them. (3) In subsection (2) “body of persons” includes a partnership. (4) Expenditure on the acquisition of know-how is not qualifying expenditure if it is treated as a payment for goodwill under section 194(3) of ITTOIA 2005 or under section 178(3) of CTA 2009 (consideration for know-how on disposal of trade to be treated as payment for goodwill, unless parties otherwise elect etc.).
Propose a change(1) Qualifying expenditure has to be pooled for the purpose of determining a person’s entitlement to writing-down allowances and balancing allowances and liability to balancing charges. (2) There is a separate pool for each trade in respect of which the person has qualifying expenditure.
Propose a change(1) Whether a person is entitled to a writing-down allowance or a balancing allowance, or liable to a balancing charge, for a chargeable period is determined separately for each pool of qualifying expenditure and depends on— (a) the available qualifying expenditure in that pool for that period (“AQE”), and (b) the total of any disposal values to be brought into account in that pool for that period (“TDV”). (2) If AQE exceeds TDV, the person is entitled to a writing-down allowance or a balancing allowance for the period. (3) If TDV exceeds AQE, the person is liable to a balancing charge for the period. (4) The entitlement under subsection (2) is to a writing-down allowance except for the final chargeable period when it is to a balancing allowance. (5) The final chargeable period is the chargeable period in which the trade is permanently discontinued.
Propose a change(1) The amount of the writing-down allowance to which a person is entitled for a chargeable period is 25% of the amount by which AQE exceeds TDV. (2) If the chargeable period is more or less than a year, the amount is proportionately increased or reduced. (3) If the trade has been carried on for part only of the chargeable period, the amount is proportionately reduced. (4) A person claiming a writing-down allowance may require the allowance to be reduced to a specified amount. (5) The amount of the balancing charge to which a person is liable for a chargeable period is the amount by which TDV exceeds AQE. (6) The amount of the balancing allowance to which a person is entitled for the final chargeable period is the amount by which AQE exceeds TDV.
Propose a changeA person’s available qualifying expenditure in a pool for a chargeable period consists of— (a) any qualifying expenditure allocated to the pool for that period in accordance with section 460, and (b) any unrelieved qualifying expenditure carried forward in the pool from the previous chargeable period under section 461.
Propose a change(1) The following rules apply to the allocation of a person’s qualifying expenditure to a pool. (2) An amount of qualifying expenditure is not to be allocated to the pool for a chargeable period if that amount has been taken into account in determining the person’s available qualifying expenditure for an earlier chargeable period. (3) Qualifying expenditure is not to be allocated to the pool for a chargeable period before that in which the expenditure is incurred.
Propose a change(1) A person has unrelieved qualifying expenditure to carry forward from a chargeable period if for that period AQE exceeds TDV. (2) The amount of the unrelieved qualifying expenditure is— (a) the excess less the writing-down allowance made for the period, or (b) if no writing-down allowance is claimed for the period, the excess. (3) No amount may be carried forward as unrelieved qualifying expenditure from the final chargeable period.
Propose a change(1) If a person carrying on a trade enters the cash basis for a tax year, any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in the pool for the trade from the chargeable period ending in the previous tax year (or, if there is more than one such period, the latest of them). (2) A “cash basis deductible amount” means any amount of unrelieved qualifying expenditure for which a deduction would be allowed in calculating the profits of the trade on the cash basis on the assumption that the expenditure was paid in the tax year for which the person enters the cash basis. (3) Any cash basis deductible amount is to be determined on such basis as is just and reasonable in all the circumstances. (4) Subsections (9) and (11) of section 1A (capital allowances and charges: cash basis) apply for the purposes of this section as they apply for the purposes of that section.
Propose a change(1) A person is required to bring a disposal value into account for the chargeable period in which he sells know-how on which he has incurred qualifying expenditure. (2) The disposal value to be brought into account is the net proceeds of the sale, so far as they consist of capital sums. (3) But no disposal value need be brought into account if the consideration received for the sale is treated as a payment for goodwill under section 194(2) of ITTOIA 2005 or under section 178(2) of CTA 2009 (consideration for know-how on disposal of trade to be treated as payment for goodwill, unless parties otherwise elect).
Propose a change