Capital Allowances Act 1990

155Further provisions relating to capital contributions

(1)This section has effect in any case where section 154 applies.

(2)Subject to the following provisions of this section, for the purpose of determining the amount of the allowances and the manner in which they are to be made, the asset shall be deemed to continue at all material times to be in use for the purposes of the trade.

(3)Where, when the contribution was made, the trade for the purposes of which it was made was carried on or to be carried on by the contributor, the following provisions shall have effect on any transfer of the trade or any part of the trade—

(a)where the transfer is of the whole trade, writing-down allowances for chargeable periods ending after the date of transfer shall be made to the transferee, and shall not be made to the transferor,

(b)where the transfer is of part only of the trade, paragraph (a) above shall have effect with respect to so much of the allowance as is properly referable to the part of the trade transferred.

(4)Where, when the contribution was made, the trade was carried on or to be carried on by a tenant of land in which the contributor had an interest, a writing-down allowance shall be made to a person for a chargeable period if at the end of that period he is entitled to the contributor’s interest in that land, and section 20 shall, with the necessary modifications, apply in relation to a contribution made for the purposes of a trade carried on or to be carried on by a tenant of land as it applies in relation to expenditure incurred on the construction of a building or structure.

(5)Section 3(3) shall not apply in relation to writing-down allowances to be made in respect of contributions.

(6)Where an allowance is made in accordance with section 154(2) in respect of a contribution made after 26th July 1989 for the purposes of a trade carried on or to be carried on by the contributor, it shall be assumed for the purposes of sections 24, 25 and 26—

(a)that the contribution was made for the purposes of a trade carried on by the contributor separately from any trade actually carried on by him, and

(b)that the separate trade is discontinued or transferred (in whole or in part) when the trade actually carried on is discontinued or transferred (in whole or in part);

and any allowance or charge which would on those assumptions fall to be made for any chargeable period in the case of the separate trade shall be made for that period in the case of the trade for the purposes of which the contribution was actually made.

(7)Subject to subsection (8) below, subsections (3) to (5) above shall not apply where the trade is husbandry in the United Kingdom or the occupation of woodlands in the United Kingdom, and in lieu thereof section 122(3), (4) and (5) or section 126, as the case may require, shall apply with any necessary modifications.

This subsection shall have effect after 5th April 1993 with the omission of the words “or the occupation of woodlands in the United Kingdom”.

(8)In its application to allowances under Part V, except section 122, this section shall have effect with the omission of subsection (7) and as if in subsection (4) the references to section 20 and to expenditure incurred on the construction of a building or structure were references to section 125(2) to (4) and to expenditure falling within section 123.

This subsection shall have effect in relation to contributions made on or after 27th July 1989.