Office of Public Sector Information
PART VIII continued
(2) The sum referred to in subsection (1)(a) above is—
(a) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with section 8;
(b) in the case of a qualifying dwelling-house, the residue of the expenditure immediately before the sale, computed in accordance with section 90;
(c) in the case of assets representing qualifying expenditure, within the meaning of section 121, the excess of that expenditure attributable to those assets over the aggregate of—
(i) any allowances made under Part IV to the seller in respect of that expenditure before the sale; and
(ii) any disposal receipts which the seller has been required to bring into account by reference to that expenditure by reason of any event occurring before the sale.
(3) An election may not be made under this section—
(a) if—
(i) any of the parties to the sale is not resident in the United Kingdom at the time of sale, and
(ii) the circumstances are not at that time such that an allowance or charge under Part I, III, IV, VI or VII falls or might fall to be made to or on that party in consequence of the sale;
(b) if the buyer is a dual resident investing company;
(c) in the case of a qualifying dwelling-house, unless both the seller and the buyer at the time of the sale are or at any earlier time were approved bodies, as defined in section 56(4) of the [1980 c. 51.] Housing Act 1980.
(4) All such assessments and adjustments of assessments shall be made as may be necessary to give effect to this section.
(5) This section shall not apply in relation to any sale which is material for the purposes of Part V.
(6) In relation to sales which occurred before 29th July 1988, this section shall have effect with the omission of subsection (4) and the words in subsection (1) “not later than two years after the sale”.
(1) References in this Act to capital expenditure and capital sums—
(a) in relation to the person incurring the expenditure or paying the sums, do not include any expenditure or sum which is allowed to be deducted in computing, for the purposes of tax, the profits or gains of a trade, profession, office, employment or vocation carried on or held by him, and
(b) in relation to the person receiving the amounts expended or the sums in question, do not include references to any amounts or sums which fall to be taken into account as receipts in computing the profits or gains of any trade, profession, office, employment or vocation carried on or held by him,
and do not include, in relation to any such person, any expenditure or sum in the case of which a deduction falls or may fall to be made under section 348 or 349(1) of the principal Act (annual payments).
(2) The following provisions of this section have effect to determine when capital expenditure is to be taken to be incurred for the purposes of this Act and any enactment (including any enactment passed after this Act) which falls to be construed (or is expressed to have effect) as if it were contained in this Act.
(3) Subject to subsections (4) to (6) below, an amount of capital expenditure is to be taken to be incurred on the date on which the obligation to pay that amount becomes unconditional (whether or not there is a later date on or before which the whole or any part of that amount is required to be paid).
(4) If, under or by virtue of any agreement—
(a) as a result of the issue of a certificate or some other event, an obligation to pay an amount of capital expenditure on the provision of an asset becomes unconditional, and
(b) at a time before that obligation becomes unconditional, the asset becomes the property of or is otherwise under the contract attributed to the person having that obligation,
then, in a case where the obligation referred to in paragraph (a) above becomes unconditional within the period of one month beginning at the end of a chargeable period or its basis period but the time referred to in paragraph (b) above falls at or before the end of that chargeable period or its basis period, subsection (3) above shall apply as if the obligation became unconditional immediately before the expiry of that period.
(5) Where, under or by virtue of any agreement, the whole or any part of an amount of capital expenditure is required to be paid on (or not later than) a date which is more than four months after the date on which the obligation to pay that amount becomes unconditional, so much of that expenditure as is required to be so paid shall be taken to be incurred on the date on or before which it is required to be so paid.
(6) In any case where—
(a) under or by virtue of any agreement, an obligation to pay an amount of capital expenditure becomes unconditional on a date earlier than that which accords with normal commercial usage, and
(b) the sole or main benefit which (apart from this subsection) might have been expected to be obtained from the obligation becoming unconditional on that earlier date is that, by virtue of subsection (3) above, the expenditure would be taken to be incurred in a chargeable period or its basis period which is earlier than would otherwise have been the case,
then, in relation to that amount of expenditure, subsection (3) above shall have effect as if, for the words from “on which” onwards there were substituted “on or before which it is required to be paid”; and, accordingly, subsection (5) above shall be disregarded.
(7) In so far as (apart from subsections (3) to (6) above) any provision of this Act, or sections 520 to 533 of the principal Act (patents and know-how), would have the effect that any expenditure would for any purpose fall to be treated as incurred on a date which is later than that which would result from the application of those subsections, nothing in this section shall affect the continuing operation of that provision.
(8) In relation to any chargeable period or its basis period ending before 27th July 1989, the reference in subsection (7) above to this Act shall be construed as excluding a reference to Parts III to V of this Act.
(1) Except as otherwise expressly provided, in this Act as it applies for income tax purposes, “basis period” has the meaning given by the following provisions of this section.
(2) In the case of a person to or on whom an allowance or charge falls to be made in taxing his trade, his basis period for any year of assessment is the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any provision of section 60 of the principal Act, the profits or gains of any other period are to be taken to be the profits or gains of that period, that other period.
(3) For the purposes of subsection (2) above, in the case of any trade—
(a) where two basis periods overlap, the period common to both shall be deemed to fall in the first basis period only;
(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and
(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.
(4) Where an allowance falls to be made under Part II to a person carrying on a profession or vocation, subsections (2) and (3) above shall apply as if the references to a trade included references to a profession or vocation and as if the reference to Case I of Schedule D included a reference to Case II of Schedule D.
(5) In the case of any other person to or on whom an allowance or charge falls to be made under Parts I to VI or this Part, his basis period for any year of assessment is the year of assessment itself.
(6) Any reference in this section to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.
(1) Subject to subsection (10) below and except where the context otherwise requires, the following provisions of this section shall have effect for the interpretation of this Act.
(2) In this Act—
“the 1968 Act” means the [1968 c. 3.] Capital Allowances Act 1968;
“the Board” means the Commissioners of Inland Revenue;
“chargeable period” means an accounting period of a company or a year of assessment; and—
a reference to a “chargeable period or its basis period” is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment;
a reference to a “chargeable period related to” the incurring of expenditure, or a sale or other event, is a reference to the chargeable period in which, or to that in the basis period for which, the expenditure is incurred or the sale or other event takes place, and means the latter if, but only if, the chargeable period is a year of assessment;
“control” means—
in relation to a body corporate, the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person, and
in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership;
“dual resident investing company” means a company which is for the purposes of section 404 of the principal Act a dual resident investing company;
“foreign concession” means a right or privilege granted by the government of, or any municipality or other authority in, any territory outside the United Kingdom;
“income” includes any amount on which a charge to tax is authorised to be made under any of the provisions of this Act;
“lease” includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and “lessee”, “lessor” and “leasehold interest” shall be construed accordingly;
“mineral deposits” includes any natural deposits capable of being lifted or extracted from the earth and, for this purpose, geothermal energy, whether in the form of aquifers, hot dry rocks or otherwise, shall be treated as a natural deposit;
“notice” means a notice in writing;
“the principal Act” means the [1988 c. 1.] Income and Corporation Taxes Act 1988;
“scientific research allowance” means an allowance made under Part VII other than an allowance under section 136;
“tax”, where neither corporation tax nor income tax is specified, means either of those taxes;
“writing-down allowance”, where the reference is partly to years of assessment before the year 1966-67, includes an annual allowance in the sense which, in the context, that phrase had immediately before the commencement of the [1965 c. 25.] Finance Act 1965;
and any reference to a particular Part, Chapter or Schedule is a reference to that Part or Chapter of or Schedule to this Act.
(3) This Act shall apply in relation to a trade, profession or vocation chargeable in accordance with section 65(3) of the principal Act as it applies to one chargeable to tax under Case I or II of Schedule D.
(4) For the purposes of this Act, a source of income is “within the charge to” corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax shall be similarly construed.
(5) Any reference to allowances or charges being made in taxing a trade is a reference to their being made in computing the trading income for corporation tax or in charging the profits or gains of the trade to income tax.
(6) Any reference to an allowance made or deduction allowed includes a reference to an allowance or deduction which would be made or allowed but for an insufficiency of profits or gains, or other income, against which to made it.
(7) Any reference to any building, structure, machinery, plant, works, asset, farmhouse, farm or forestry building, cottage or fence shall be construed as including a reference to a part of any building, structure, machinery, plant, works, asset, farmhouse, farm or forestry building, cottage or fence.
This subsection shall not apply where the reference is expressed to be to the whole of a building or structure; and in relation to chargeable periods beginning on or after 6th April 1993 this subsection shall have effect with the omission of the words “or forestry” (in both places where they occur).
(8) Any reference to the time of any sale shall be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier.
This subsection does not apply for the purposes of Part VII.
(9) Any reference to the setting up, commencement or permanent discontinuance of a trade includes, except where the contrary is expressly provided, a reference to the occurring of an event which, under any of the provisions of the Income Tax Acts or the Corporation Tax Acts (other than paragraph 7 of Schedule 16 to the [1965 c. 25.] Finance Act 1965), is to be treated as equivalent to the setting up, commencement or permanent discontinuance of a trade.
(10) For the purposes of Part II this section shall have effect with the omission of the definitions of “control” and “lease” and related expressions in subsection (1) above and of subsection (8); and subsections (5), (7) and (9) do not apply for the purposes of Part III.
(11) Chapter I of Part XIII of the principal Act (which relates to patents and know-how) contains further provisions relating to capital allowances.
In the application of this Act to Scotland, “leasehold interest” means the interest of a tenant in property subject to a lease; and any reference to an interest which is reversionary on a leasehold interest or on a lease shall be construed as a reference to the interest of the landlord in the property subject to the leasehold interest or lease.
(1) The continuity of the Income Tax Acts and the Corporation Tax Acts shall not be affected by the substitution of this Act for the repealed enactments.
(2) Any reference, whether express or implied, in any enactment, instrument or document (including this Act or any Act amended by this Act) to, or to things done or falling to be done under or for the purposes of, any provision of this Act shall, if and so far as the nature of the reference permits, be construed as including, in relation to the times, years or periods, circumstances or purposes in relation to which the corresponding provision in the repealed enactments has or had effect, a reference to, or, as the case may be, to things done or falling to be done under or for the purposes of, that corresponding provision.
(3) Any reference, whether express or implied, in any enactment, instrument or document (including the repealed enactments and enactments, instruments and documents passed or made after the passing of this Act) to, or to things done or falling to be done under or for the purposes of, any of the repealed enactments shall, if and so far as the nature of the reference permits, be construed as including, in relation to the times, years or periods, circumstances or purposes in relation to which the corresponding provision of this Act has effect, a reference to, or as the case may be, to things done or deemed to be done or falling to be done under or for the purposes of, that corresponding provision.
(4) In connection with the transition for companies from income tax to corporation tax effected by the [1965 c. 25.] Finance Act 1965 the provisions of this Act and any other provisions of the Income Tax Acts relevant thereto shall have effect with such modifications as are necessary to preserve the continuity of the system of allowances and charges under this Act, and so that in particular references to a previous chargeable period or to a subsequent chargeable period, or to a time before, or a time after, a chargeable period, shall have effect in relation to a company as if the year 1965-66 or any earlier year of assessment preceded that company’s first accounting period for corporation tax.
This subsection shall not be taken to require any time to be counted twice in reckoning duration, except in a case where any time has been so counted by virtue of section 15(2) of the 1968 Act.
(5) In this section “the repealed enactments” means the enactments repealed by this Act and earlier enactments repealed by any enactment repealed by this Act.
(6) The provisions of this section and section 164 are without prejudice to the provisions of the [1978 c. 30.] Interpretation Act 1978 as respects the effect of repeals.
(1) Except as otherwise expressly provided, this Act shall have effect as respects allowances and charges falling to be made for chargeable periods ending after 5th April 1990, and, accordingly, to the extent required to give effect to section 163(1), applies in relation to expenditure incurred in chargeable periods ending before 6th April 1990.
(2) The allowances referred to in subsection (1) above include those which fall to be made for one chargeable period by setting any part of them against the profits or gains of some other chargeable period, and, accordingly, subsection (1) above shall apply to allowances falling to be made for chargeable periods ending after 5th April 1990 notwithstanding that, under any provision of this Act, or under any other provision of the Income Tax Acts or the Corporation Tax Acts, effect is to be given to those allowances by setting any part of them against the profits or gains of a chargeable period ending before 6th April 1990.
(3) Schedule 1, which makes amendments to other enactments consequential on the passing of this Act, shall have effect (but nothing in that Schedule shall affect the construction of any enactment mentioned in it for chargeable periods ending before 6th April 1990).
(4) Subject to section 82, the enactments mentioned in Schedule 2 shall be repealed to the extent specified in the third column of that Schedule, and the provisions of this Act shall have effect in accordance with subsection (1) above to the exclusion of the corresponding provisions so repealed, and those repeals take effect accordingly.
(5) The repeals referred to above shall not affect any enactment so far as it authorises the taking into account, in any computation required to be made for any tax purpose for chargeable periods for which this Act has effect, of expenditure incurred in earlier chargeable periods, whether by setting any part of it against profits or gains of a chargeable period ending after 5th April 1990 or otherwise.
This Act may be cited as the Capital Allowances Act 1990.
Capital Allowances Act 1990