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Finance Bill (Volume I)
Part 3 — Capital allowances

42

 

76      

Gas refuelling stations

(1)   

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

station) is amended as follows.

(2)   

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

(3)   

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

5

(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;”.

(5)   

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

expenditure incurred on or after 1 April 2008.

10

77      

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.

Plant and machinery: writing-down allowances and pools

78      

Main rate of writing down allowance

15

(1)   

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

follows.

(2)   

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

(3)   

After that subsection insert—

“(1A)   

But in relation to qualifying expenditure incurred wholly for the

20

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

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

which AQE exceeds TDR.”

25

(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

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

(6)   

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

30

(a)   

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

(b)   

paragraph 95(4),

(c)   

paragraph 97(2) and (3),

(d)   

paragraph 98(8), and

(e)   

paragraph 99(2).

35

(7)   

In paragraph 99—

(a)   

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

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

43

 

(b)   

after that sub-paragraph insert—

    “(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

5

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

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

10

(b)   

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

(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

15

(c)   

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

   

the references to 20% were to x%.

(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.

20

(11)   

In subsection (10)—

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

25

CP is the number of days in the chargeable period.

(12)   

The relevant date is—

(a)   

for corporation tax purposes, 1 April 2008, and

(b)   

for income tax purposes, 6 April 2008.

79      

Small pools

30

(1)   

CAA 2001 is amended as follows.

(2)   

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

insert—

“(za)   

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

(3)   

After section 56 insert—

35

“56A    

Writing-down allowances for small pools

(1)   

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

pool.

(2)   

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

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

40

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

44

 

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

which AQE exceeds TDR.

(3)   

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

(a)   

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

proportionately increased or reduced, and

5

(b)   

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

chargeable period, it is proportionately reduced.

(4)   

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

require the allowance to be reduced to a specified amount.

(5)   

The Treasury may by order substitute for the amount for the time being

10

specified in subsection (3) such other amount as it thinks fit.

(6)   

An order under subsection (5) may make such incidental,

supplemental, consequential and transitional provision as the Treasury

thinks fit.”

(4)   

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

15

(a)   

after “that period” insert “(a)”, and

(b)   

after “TDR” insert “, and

(b)   

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

a writing-down allowance of the amount by which AQE

exceeds TDR.”

20

(5)   

The amendments made by this section have effect—

(a)   

for corporation tax purposes, in relation to chargeable periods

beginning on or after 1 April 2008, and

(b)   

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

or after 6 April 2008.

25

80      

Special rate expenditure and the special rate pool

Schedule 26 contains provision about special rate expenditure and the special

rate pool.

81      

Existing long-life asset expenditure treated as special rate expenditure

(1)   

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

30

(a)   

incurred before the relevant date, and

(b)   

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

date.

(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%,

35

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.

(3)   

In subsection (2)—

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

40

date,

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

45

 

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.

(4)   

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

(a)   

a transitional chargeable period, or

5

(b)   

a chargeable period which ends immediately before the relevant date,

   

is to be carried forward to the special rate pool.

(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

10

in subsection (4).

(6)   

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

(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

15

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

from that chargeable period.

(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

20

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

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

(b)   

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

the expenditure include allowances that could have been made under

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

25

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—

(a)   

for corporation tax purposes, 1 April 2008, and

30

(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

82      

Abolition of allowances from 2011

35

(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.

(3)   

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

40

periods beginning on or after the relevant date.

(4)   

The relevant date is—

(a)   

for corporation tax purposes, 1 April 2011, and

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

46

 

(b)   

for income tax purposes, 6 April 2011.

(5)   

Schedule 27 contains amendments and savings related to this section.

83      

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

5

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

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

10

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

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

15

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

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

20

period is to be determined by—

(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

25

each of those years.

(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—

30

   

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

  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

35

   

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

  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]]]

40

   

where—

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

47

 

   

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

5

   

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).

10

(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.

15

(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.

20

(10)   

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

 

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

   

25

 

Financial year beginning

Tax year 2008-09

75%

 
 

1 April 2008

   
 

Financial year beginning

Tax year 2009-10

50%

 
 

1 April 2009

   
 

Financial year beginning

Tax year 2010-11

25%

 

30

 

1 April 2010

   
 

Financial year beginning

Tax year 2011-12 and

0%.

 
 

1 April 2011 and later

later tax years

  
 

financial years

   

(11)   

In this section—

35

“the relevant date” has the same meaning as in section 82, and

“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.

84      

Qualifying enterprise zone expenditure: transitional provision

40

(1)   

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

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

 
 

Finance Bill (Volume I)
Part 3 — Capital allowances

48

 

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—

   

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

5

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.

(3)   

In this section “the relevant date” has the same meaning as in section 82.

10

85      

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—

(a)   

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

15

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

(d)   

the purpose, or one of the main purposes, of the sale is the

obtaining of a tax advantage by the buyer under this Part.

20

(2)   

The writing-down allowance to which the buyer is entitled for the

chargeable period in which the sale takes place is—equation: cross[over[times[char[D],char[I]],times[char[C],char[P]]],times[char[W],char[D],

char[A]]]

   

where—

   

DI is the number of days in the chargeable period for which the

  buyer is entitled to the relevant interest,

25

   

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

   

WDA is the writing-down allowance to which the buyer would

  be entitled apart from this section.”

(2)   

The amendment made by subsection (1) has effect in relation to the sale of a

relevant interest on or after 12 March 2008, except for such a sale in pursuance

30

of a relevant pre-commencement contract (and for this purpose “sale” has the

same meaning as for the purposes of Part 3 of CAA 2001).

(3)   

A contract is a relevant pre-commencement contract if—

(a)   

the contract is a contract in writing made before 12 March 2008,

(b)   

the contract is unconditional or its conditions have been satisfied before

35

that date,

(c)   

no terms remain to be agreed on or after that date, and

(d)   

the contract is not varied in a significant way on or after that date.

 
 

 
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