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Finance Bill


Finance Bill
Part 3 — Capital allowances

40

 

(7)   

Subsection (8) applies in relation to an additional VAT liability incurred on or

after the day this section comes into force which under section 235 of CAA 2001

is treated as qualifying expenditure.

(8)   

If the original expenditure (within the meaning of that section) was first-year

qualifying expenditure by virtue of a provision repealed by subsections (2) to

5

(4), Chapter 18 of Part 2 of that Act (additional VAT liabilities and rebates)

applies to the additional VAT liability as if that provision were not so repealed.

74      

Cars with low carbon dioxide emissions

(1)   

Section 45D of CAA 2001 (expenditure on cars with low carbon dioxide

emissions) is amended as follows.

10

(2)   

In subsection (1)(a), for “2008” substitute “2013”.

(3)   

In subsection (4), for “120” substitute “110”.

(4)   

In consequence of the amendment made by subsection (2), in section 60(2)(b)

of FA 2002 (period for which section 578A(2A) and (2B) of ICTA have effect),

for “2008” (in both places) substitute “2013”.

15

(5)   

The amendment made by subsection (3) has effect in relation to expenditure

incurred on or after 1 April 2008.

(6)   

But in relation to expenditure incurred on the hiring of a car—

(a)   

for a period of hire which begins on or before 31 March 2008, and

(b)   

under a contract entered into on or before 31 March 2008,

20

   

section 578A of ICTA applies on and after 1 April 2008 as if the amendment

made by subsection (3) did not have effect.

75      

Gas refuelling stations

(1)   

Section 45E of CAA 2001 (expenditure on plant or machinery for gas refuelling

station) is amended as follows.

25

(2)   

In subsection (1)(a), for “2008” substitute “2013”.

(3)   

After “natural gas” (in each place) insert “, biogas”.

(4)   

In subsection (4), before the definition of “gas refuelling station” insert—

““biogas” means gas produced by the anaerobic conversion of organic

matter and used for propelling vehicles;”.

30

(5)   

The amendments made by subsections (3) and (4) have effect in relation to

expenditure incurred on or after 1 April 2008.

76      

First-year tax credits

Schedule 25 contains provision about the payment of first-year tax credits to

companies in connection with certain first-year qualifying expenditure.

35

 
 

Finance Bill
Part 3 — Capital allowances

41

 

Plant and machinery: writing-down allowances and pools

77      

Main rate of writing down allowance

(1)   

Section 56 of CAA 2001 (amount of allowances and charges) is amended as

follows.

(2)   

In subsection (1), for “25%” substitute “20%”.

5

(3)   

After that subsection insert—

“(1A)   

But in relation to qualifying expenditure incurred wholly for the

purposes of a ring fence trade in respect of which tax is chargeable

under section 501A of ICTA (supplementary charge in respect of ring

fence trades), the amount of the writing-down allowance to which a

10

person is entitled for a chargeable period is 25% of the amount by

which AQE exceeds TDR.”

(4)   

In subsection (2), for “Subsection (1) is” substitute “Subsections (1) and (1A)

are”.

(5)   

Part 10 of Schedule 22 to FA 2000 (companies within tonnage tax: capital

15

allowances in respect of ship leasing) is amended as follows.

(6)   

In each of the following provisions, for “25%” substitute “20%”—

(a)   

paragraph 94(3)(a) and (4),

(b)   

paragraph 95(4),

(c)   

paragraph 97(2) and (3),

20

(d)   

paragraph 98(8), and

(e)   

paragraph 99(2).

(7)   

In paragraph 99—

(a)   

in sub-paragraph (4), for “25%” substitute “the appropriate rate”, and

(b)   

after that sub-paragraph insert—

25

    “(5)  

The appropriate rate is 20%; but if for any part of the period

mentioned in sub-paragraph (4) the rate of writing-down

allowance to which the lessor would have been entitled

under section 56(1) of the Capital Allowances Act 2001 if

paragraph 94 had not applied was more than 20%, for that

30

part of the period that rate is the appropriate rate.”

(8)   

The amendments made by this section have effect in relation to chargeable

periods—

(a)   

beginning on or after the relevant date, and

(b)   

beginning before, and ending on or after, the relevant date.

35

(9)   

But in respect of a chargeable period within subsection (8)(b), they apply as if

in—

(a)   

section 56(1) of CAA 2001,

(b)   

the provisions listed in subsection (6), and

(c)   

paragraph 99(5) of Schedule 22 to FA 2000,

40

   

the references to 20% were to x%.

 
 

Finance Bill
Part 3 — Capital allowances

42

 

(10)   

For the purposes of subsection (9)—equation: equal[char[x],plus[(*n*)id[cross[(*n*)num[25.0000000000000000,"25"],over[(*n*)times[

char[(*n*)B],char[R],char[D]],times[char[(*n*)C],char[P]]]]],id[cross[(*n*)num[20.0000000000000000,

"20"],over[(*n*)times[char[(*n*)A],char[R],char[D]],times[char[(*n*)C],char[P]]]]]]]

   

Where x would be a figure with more than 2 decimal places, it is to be rounded

up to the nearest second decimal place.

(11)   

In subsection (10)—

BRD is the number of days in the chargeable period before the relevant

5

date,

ARD is the number of days in the chargeable period on and after the

relevant date, and

CP is the number of days in the chargeable period.

(12)   

The relevant date is—

10

(a)   

for corporation tax purposes, 1 April 2008, and

(b)   

for income tax purposes, 6 April 2008.

78      

Small pools

(1)   

CAA 2001 is amended as follows.

(2)   

In section 56(2) (amount of allowances and charges), before paragraph (a)

15

insert—

“(za)   

section 56A (small main pools and special rate pools),”.

(3)   

After section 56 insert—

“56A    

Writing-down allowances for small pools

(1)   

This section applies in relation to the main pool and the special rate

20

pool.

(2)   

Where the amount by which AQE exceeds TDR is less than or equal to

the small pool limit, the amount of the writing-down allowance to

which a person is entitled for a chargeable period is the amount by

which AQE exceeds TDR.

25

(3)   

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

(a)   

if the chargeable period is more or less than a year, it is

proportionately increased or reduced, and

(b)   

if the qualifying activity has been carried on for part only of the

chargeable period, it is proportionately reduced.

30

(4)   

A person claiming a writing-down allowance under this section may

require the allowance to be reduced to a specified amount.”

(4)   

In section 59(1) (definition of unrelieved qualifying expenditure)—

(a)   

after “that period” insert “(a)”, and

(b)   

after “TDR” insert “, and

35

(b)   

where section 56A(2) applies, the person does not claim

a writing-down allowance of the amount by which AQE

exceeds TDR.”

(5)   

The amendments made by this section have effect—

(a)   

for corporation tax purposes, in relation to chargeable periods

40

beginning on or after 1 April 2008, and

 
 

Finance Bill
Part 3 — Capital allowances

43

 

(b)   

for income tax purposes, in relation to chargeable periods beginning on

or after 6 April 2008.

79      

Special rate expenditure and the special rate pool

Schedule 26 contains provision about special rate expenditure and the special

rate pool.

5

80      

Existing long-life asset expenditure treated as special rate expenditure

(1)   

This section applies in relation to long-life asset expenditure—

(a)   

incurred before the relevant date, and

(b)   

allocated to a pool in a chargeable period beginning before the relevant

date.

10

(2)   

In relation to a transitional chargeable period, section 102 of CAA 2001 applies

as if the percentage figure specified in subsection (1) of that section were x%,

where—equation: equal[char[x],plus[(*n*)id[cross[(*n*)num[6.0000000000000000,"6"],over[(*n*)times[

char[(*n*)B],char[R],char[D]],times[char[(*n*)C],char[P]]]]],id[cross[(*n*)num[10.0000000000000000,

"10"],over[(*n*)times[char[(*n*)A],char[R],char[D]],times[char[(*n*)C],char[P]]]]]]]

   

Where x would be a figure with more than 2 decimal places, it is to be rounded

up to the nearest second decimal place.

15

(3)   

In subsection (2)—

BRD is the number of days in the chargeable period before the relevant

date,

ARD is the number of days in the chargeable period on and after the

relevant date, and

20

CP is the number of days in the chargeable period.

(4)   

Any unrelieved qualifying expenditure in a long-life asset pool at the end of—

(a)   

a transitional chargeable period, or

(b)   

a chargeable period which ends immediately before the relevant date,

   

is to be carried forward to the special rate pool.

25

(5)   

In subsequent chargeable periods, expenditure so carried forward is to be

treated for the purposes of CAA 2001 as if it were special rate expenditure

carried forward in the special rate pool from the chargeable period mentioned

in subsection (4).

(6)   

Any unrelieved qualifying expenditure in a single asset pool at the end of—

30

(a)   

a transitional chargeable period, or

(b)   

a chargeable period which ends immediately before the relevant date,

   

is in subsequent chargeable periods to be treated for the purposes of CAA 2001

as if it were special rate expenditure carried forward in the single asset pool

from that chargeable period.

35

(7)   

Where expenditure is treated as special rate expenditure because of this

section, for the purposes of section 104E of CAA 2001—

(a)   

the reference in subsection (1)(a) of that section to section 104D of CAA

2001 includes a reference to section 102 of that Act (writing-down

allowances in respect of long-life asset expenditure), and

40

(b)   

the allowances that could have been made to the taxpayer in respect of

the expenditure include allowances that could have been made under

 
 

Finance Bill
Part 3 — Capital allowances

44

 

section 102 of that Act for chargeable periods before that in which the

expenditure was first treated as special rate expenditure.

(8)   

A “transitional chargeable period” is one which begins before, and ends on or

after, the relevant date.

(9)   

“The relevant date” means—

5

(a)   

for corporation tax purposes, 1 April 2008, and

(b)   

for income tax purposes, 6 April 2008.

(10)   

Expressions used in this section and in CAA 2001 have the same meaning in

this section as in that Act.

Industrial and agricultural buildings allowances

10

81      

Abolition of allowances from 2011

(1)   

Parts 3 and 4 of CAA 2001 (industrial buildings allowances and agricultural

buildings allowances) do not apply in relation to expenditure incurred on or

after the relevant date.

(2)   

Omit those Parts of that Act.

15

(3)   

The amendment made by subsection (2) has effect in relation to chargeable

periods beginning on or after the relevant date.

(4)   

The relevant date is—

(a)   

for corporation tax purposes, 1 April 2011, and

(b)   

for income tax purposes, 6 April 2011.

20

(5)   

Schedule 27 contains amendments and savings related to this section.

82      

Phasing out of allowances before abolition

(1)   

For a chargeable period to which this section applies (“a transitional chargeable

period”), a person’s entitlement to a writing-down allowance under Part 3 or 4

of CAA 2001 in respect of qualifying expenditure is to be determined in

25

accordance with this section.

(2)   

This section does not apply to a writing-down allowance in respect of

qualifying enterprise zone expenditure.

(3)   

If the whole of a transitional chargeable period falls within a financial year

listed in column 1 of the table (for corporation tax purposes) or a tax year listed

30

in column 2 of the table (for income tax purposes), the writing-down allowance

to which the person is entitled for that chargeable period is—equation: cross[times[char[W],char[D],char[A]],char[P]]

   

where—

   

WDA is the writing-down allowance to which the person would be

entitled for the chargeable period apart from this section, and

35

   

P is the percentage specified in relation to that year in column 3 of the

table.

(4)   

If subsection (3) does not apply in relation to a transitional chargeable period,

the writing-down allowance to which the person is entitled for that chargeable

period is to be determined by—

40

 
 

Finance Bill
Part 3 — Capital allowances

45

 

(a)   

calculating the apportioned writing-down allowance for each financial

year (for corporation tax purposes) or tax year (for income tax

purposes) in which part of the chargeable period falls, and

(b)   

adding the amounts of the apportioned writing-down allowance for

each of those years.

5

(5)   

For the purposes of Part 3 of CAA 2001 (industrial buildings), the apportioned

writing-down allowance for a financial year or tax year in which part of a

transitional chargeable period falls is—equation: cross[over[times[char[D],char[C],char[P],char[Y]],times[char[D],char[C],char[P]]],

cross[times[char[W],char[D],char[A]],char[P]]]

   

where—

   

DCPY is the number of days in the chargeable period which fall in that

10

  year,

   

DCP is the number of days in the chargeable period,

   

WDA is the writing-down allowance to which the person would be

  entitled for the chargeable period apart from this section, and

   

P is the percentage specified in relation to that year in column 3 of the

15

  table.

(6)   

For the purposes of Part 4 of CAA 2001 (agricultural buildings), the

apportioned writing-down allowance for a financial year or tax year in which

part of a transitional chargeable period falls is—equation: cross[over[times[char[R],char[D],char[C],char[P],char[Y]],times[char[R],char[D],

char[C],char[P]]],cross[times[char[W],char[D],char[A]],char[P]]]

   

where—

20

   

RDCPY is the number of relevant days in the chargeable period which

fall in that year,

   

RDCP is the number of relevant days in the chargeable period,

   

WDA is the writing-down allowance to which the person would be

entitled for the chargeable period apart from this section, and

25

   

P is the percentage specified in relation to that year in column 3 of the

table.

(7)   

The relevant days in the chargeable period are the days in that period for which

the person was entitled to the relevant interest in relation to the qualifying

expenditure (within the meaning of Part 4 of CAA 2001).

30

(8)   

For the purposes of CAA 2001, the residue of the qualifying expenditure at any

time is to be calculated as if the writing-down allowance made to a person

under Part 3 or 4 of that Act in respect of the qualifying expenditure for any

transitional chargeable period were the writing-down allowance which would

have been made apart from this section.

35

(9)   

This section applies—

(a)   

for corporation tax purposes, to chargeable periods which begin before

the relevant date and end on or after 1 April 2008, and

(b)   

for income tax purposes, to chargeable periods which begin before the

relevant date and end on or after 6 April 2008.

40

(10)   

In this section references to the table are to the following table—

 
 

Finance Bill
Part 3 — Capital allowances

46

 
 

Column 1

Column 2

Column 3

 
 

Financial year beginning

Tax year 2007-08 and

100%

 
 

1 April 2007 and earlier

earlier tax years

  
 

financial years

   
 

Financial year beginning

Tax year 2008-09

75%

 

5

 

1 April 2008

   
 

Financial year beginning

Tax year 2009-10

50%

 
 

1 April 2009

   
 

Financial year beginning

Tax year 2010-11

25%

 
 

1 April 2010

   

10

 

Financial year beginning

Tax year 2011-12 and

0%.

 
 

1 April 2011 and later

later tax years

  
 

financial years

   

(11)   

In this section—

“the relevant date” has the same meaning as in section 81, and

15

“qualifying expenditure”, in relation to a writing-down allowance under

Part 3 or 4 of CAA 2001, means the qualifying expenditure in respect of

which the allowance is made.

83      

Qualifying enterprise zone expenditure: transitional provision

(1)   

For a chargeable period which begins before, and ends on or after, the relevant

20

date, a person’s entitlement to a writing-down allowance under Part 3 of CAA

2001 in respect of qualifying enterprise zone expenditure is to be determined

in accordance with subsection (2).

(2)   

The writing-down allowance to which the person is entitled is—equation: cross[over[times[char[D],char[C],char[P],char[B]],times[char[D],char[C],char[P]]],

times[char[W],char[D],char[A]]]

   

where—

25

   

DCPB is the number of days in the chargeable period which fall before

the relevant date,

   

DCP is the number of days in the chargeable period, and

   

WDA is the writing-down allowance to which the person would be

entitled for the chargeable period apart from this section.

30

(3)   

In this section “the relevant date” has the same meaning as in section 81.

84      

Phasing out of industrial buildings allowance: anti-avoidance

(1)   

In CAA 2001, after section 313 insert—

“313A   

 Calculation of allowance after sale of relevant interest: anti-avoidance

(1)   

This section applies where—

35

(a)   

there is a sale of the relevant interest in the building which is a

balancing event to which section 314 applies,

(b)   

the buyer and seller have different chargeable periods,

(c)   

the control test (within the meaning of section 567) is met, and

 
 

 
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