Capital Allowances Act 2001

Chapter 4U.K. First-year qualifying expenditure

GeneralU.K.

39 First-year allowances available for certain types of qualifying expenditure onlyU.K.

A first-year allowance is not available unless the qualifying expenditure is first-year qualifying expenditure under [F1any of the following provisions]—

Types of expenditure which may qualify for first-year allowancesU.K.

F1440 Expenditure incurred for Northern Ireland purposes by small or medium-sized enterprisesU.K.

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F1441 Miscellaneous exclusions from section 40 (expenditure for Northern Ireland purposes etc.)U.K.

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F1442 Exclusion of plant or machinery partly for use outside Northern IrelandU.K.

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F1443 Effect of plant or machinery subsequently being primarily for use outside Northern IrelandU.K.

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F1544 Expenditure incurred by small or medium-sized enterprisesU.K.

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F1645 ICT expenditure incurred by small enterprisesU.K.

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F1745A Expenditure on energy-saving plant or machineryU.K.

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F1745AASection 45A exclusion: feed-in tariffs and renewable heat incentives U.K.

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F1745B Certification of energy-saving plant and machineryU.K.

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F1745C Energy-saving components of plant or machineryU.K.

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45D Expenditure on cars with low carbon dioxide emissionsU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period beginning with 17th April 2002 and ending with 31st March [F182025],

(b)it is expenditure on a car which is first registered on or after 17th April 2002 and which is unused and not second-hand,

[F19(c)the car—

(i)is electrically-propelled, or

(ii)has low CO₂ emissions, and]

(d)the expenditure is not excluded by section 46 (general exclusions).

[F20(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2) For the purposes of this section [F21a car has low CO₂ emissions if it] satisfies the conditions in subsections (3) and (4).

(3) The first condition is that, when the car is first registered, it is so registered on the basis of [F22a qualifying emissions certificate.]

(4) The second condition is that the applicable CO ₂ emissions figure [F23in relation to] the car does not exceed [F240] grams per kilometre driven.

F25(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F25(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)The Treasury may by order amend the amount from time to time specified in subsection (4).

(8)In this section any reference to a car [F26is to a car within the meaning of section 268A, except that it]—

(a)includes a reference to a mechanically propelled road vehicle of a type commonly used as a hackney carriage, F27...

F27(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F28(10). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F29(11)In this section—

• “applicable CO₂ emissions figure” and “qualifying emissions certificate” have the meanings given in section 268C;

• “electrically-propelled” has the meaning given in section 268B.]

[F3045DAExpenditure on zero-emission goods vehiclesU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period of [F3115 years] beginning with the relevant date,

(b)it is incurred on the provision of a zero-emission goods vehicle,

(c)the vehicle is unused and not second-hand,

(d)the vehicle is registered, and

(e)the expenditure is not excluded by section 46 (general exclusions).

[F32(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2)For the purposes of subsection (1)(d) it does not matter whether the vehicle is first registered before or after the expenditure is incurred.

(3)In this section—

• “goods vehicle” means a mechanically propelled road vehicle which is of a design primarily suited for the conveyance of goods or burden of any description;

• “the relevant date” means—

  (a)

  in the case of expenditure incurred by a person within the charge to corporation tax, 1 April 2010, and

  (b)

  in the case of expenditure incurred by a person within the charge to income tax, 6 April 2010;

• “zero-emission goods vehicle” means a goods vehicle which cannot in any circumstances emit CO₂ by being driven.

(4)The Treasury may by order amend this Chapter so as to provide for specified descriptions of vehicles to be treated, or not to be treated, as goods vehicles for the purposes of this section.

(5)This section is subject to section 45DB.

45DBExclusions from allowances under section 45DAU.K.

(1)Expenditure incurred by a person is not first-year qualifying expenditure under section 45DA if it is within subsection (2), (4) or (6).

(2)Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45DA allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3).

(3)An undertaking is within this subsection if one or both of the following conditions are met—

(a)it is reasonable to assume that the undertaking would be regarded as [F33an undertaking in difficulty for the purposes of the General Block Exemption Regulation];

(b)the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market).

(4)Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity—

(a)in the fishery or aquaculture sector, as covered by [F34Regulation (EU) No 1379/2013 of the European Parliament and of the Council], or

(b)relating to the management of waste of undertakings.

(5)In subsection (4)(b) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person.

(6)Expenditure is within this subsection to the extent that it is taken into account for the purposes of a relevant grant, or relevant payment, made towards that expenditure.

(7)A grant or payment is relevant if it is—

(a)a F35... State aid, other than an allowance under this Part, or

(b)a grant or subsidy, other than a F35... State aid, which the Treasury by order declares to be relevant for the purposes of the withholding of a section 45DA allowance.

(8)If a relevant grant or relevant payment towards the expenditure is made after the making of a section 45DA allowance, the allowance is to be withdrawn F36....

(9)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8).

(10)Any such assessment or adjustment is not out of time if it is made within 3 years of the end of the chargeable period in which the grant or payment was made.

(11)In this section—

• “General Block Exemption Regulation” means Commission Regulation [F37(EU) No 651/2014] (General block exemption Regulation) [F38as it had effect in the United Kingdom immediately before IP completion day];

• “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council;

• F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “section 45DA allowance” means a first year allowance in respect of expenditure that is first-year qualifying expenditure under section 45DA;

• “undertaking” means—

  (a)

  an autonomous enterprise, or

  (b)

  an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any),

  and for this purpose “enterprise”, “autonomous enterprise”, “partner enterprises” and “linked enterprises” have the meaning given by Annex 1 to the General Block Exemption Regulation.

[F40(11A)Nothing in this section limits references to “State aid” to State aid which is required to be notified to and approved by the European Commission.]

(12)The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instrument replacing—

(a)the General Block Exemption Regulation,

(b)the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02),

[F41(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,]

(d)Directive 2006/12/EC of the European Parliament and of the Council, or

(e)the Treaty on the Functioning of the European Union.]

[F4245E Expenditure on plant or machinery for gas refuelling stationU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the period beginning with 17th April 2002 and ending with 31st March [F432025],

(b)it is expenditure on plant or machinery for a gas refuelling station where the plant or machinery is unused and not second-hand, and

(c)it is not excluded by section 46 (general exclusions).

[F44(1A)The Treasury may by order amend subsection (1)(a) so as to extend the period specified.]

(2)For the purposes of this section expenditure on plant or machinery for a gas refuelling station is expenditure on plant or machinery installed at a gas refuelling station for use solely for or in connection with refuelling vehicles with natural gas[F45, biogas] or hydrogen fuel.

(3)For the purposes of subsection (2) the plant or machinery which is for use for or in connection with refuelling vehicles with natural gas[F45, biogas] or hydrogen fuel includes—

(a)any storage tank for natural gas [F45, biogas] or hydrogen fuel,

(b)any compressor, pump, control or meter used for or in connection with refuelling vehicles with natural gas[F45, biogas] or hydrogen fuel, and

(c)any equipment for dispensing natural gas[F45, biogas] or hydrogen fuel to the fuel tank of a vehicle.

(4)For the purposes of this section—

• [F46“biogas” means gas produced by the anaerobic conversion of organic matter and used for propelling vehicles;]

• “gas refuelling station” means any premises, or that part of any premises, where vehicles are refuelled with natural gas[F45, biogas] or hydrogen fuel;

• “hydrogen fuel” means a fuel consisting of gaseous or cryogenic liquid hydrogen which is used for propelling vehicles;

• “vehicle” means a mechanically propelled road vehicle.]

[F4745EAExpenditure on plant or machinery for electric vehicle charging pointU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred in the relevant period,

(b)it is expenditure on plant or machinery for an electric vehicle charging point where the plant or machinery is unused and not second-hand, and

(c)it is not excluded by section 46 (general exclusions).

(2)For the purposes of this section expenditure on plant or machinery for an electric vehicle charging point is expenditure on plant or machinery installed solely for the purpose of charging electric vehicles.

(3)The “relevant period” is the period beginning with 23 November 2016 and ending with—

(a)in the case of expenditure incurred by a person within the charge to corporation tax, 31 March [F482023], and

(b)in the case of expenditure incurred by a person within the charge to income tax, 5 April [F482023].

(4)The Treasury may by regulations amend subsection (3) so as to extend the relevant period.

(5)In this section—

• “electric vehicle” means a road vehicle that can be propelled by electrical power (whether or not it can also be propelled by another kind of power);

• “electric vehicle charging point” means a facility for charging an electric vehicle.]

[F4945F Expenditure on plant and machinery for use wholly in a ring fence tradeU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred on or after 17th April 2002,

(b)it is incurred by a company,

(c)it is incurred on the provision of plant or machinery for use wholly for the purposes of a ring fence trade, and

(d)it is not excluded by section 46 (general exclusions).

(2)This section is subject to section 45G (plant or machinery used for less than five years in a ring fence trade).

(3) In this section “ ring fence trade ” means a ring fence trade in respect of which tax is chargeable under [F50section 330(1) of CTA 2010] (supplementary charge in respect of ring fence trades). ]

[F5145G Plant or machinery used for less than five years in a ring fence tradeU.K.

(1)Expenditure incurred by a company on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45F if the plant or machinery—

(a)is at no time in the relevant period used in a ring fence trade carried on by the company or a company connected with it, or

(b)is at any time in the relevant period used for a purpose other than that of a ring fence trade carried on by the company or a company connected with it.

(2) For the purposes of this section “ the relevant period ” means whichever of the following periods, beginning with the incurring of the expenditure, first ends, namely—

(a)the period ending with the fifth anniversary of the incurring of the expenditure, or

(b)the period ending with the day preceding the first occasion on which the plant or machinery, after becoming owned by the company which incurred the expenditure, is not owned by a company which is either that company or a company connected with it.

(3)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).

(4)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, he must give notice to [F52an officer of Revenue and Customs] specifying how the return needs to be amended.

(5)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(6) In this section “ ring fence trade ” has the same meaning as in section 45F. ]

F5345HExpenditure on environmentally beneficial plant or machineryU.K.

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F5345ICertification of environmentally beneficial plant and machineryU.K.

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F5345JEnvironmentally beneficial components of plant or machineryU.K.

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[F5445KExpenditure on plant and machinery for use in designated assisted areasU.K.

(1)Expenditure is first-year qualifying expenditure if—

(a)it is incurred by a company on the provision of plant or machinery for use primarily in an area which at the time the expenditure is incurred is a designated assisted area,

(b)it is incurred in the period F55... beginning with [F56the date on which the area is (or is treated as) designated under subsection (2)(a)] [F57and ending with whichever is the later of the day immediately before the eighth anniversary of that date or 31st March 2021],

(c)Conditions A to E are met.

[F58(1A)The Treasury may by order amend subsection (1)(b) so as to extend the period specified.]

(2)“Designated assisted area” means an area which—

(a)is designated by an order made by the Treasury, and

(b)falls wholly within an assisted area.

(3)An area may be designated by an order under subsection (2)(a) only if at the time the order is made—

(a)the area falls wholly within an enterprise zone, and

(b)a memorandum of understanding, in respect of the area, relating to the availability of allowances in respect of expenditure to which this section applies has been entered into by the Treasury and the responsible authority for the area.

(4)An order made under subsection (2)(a) may provide that an area designated by the order is to be treated as having been so designated at times falling before the order is made.

(5)But where an area has previously been designated by an order under subsection (2)(a), section 14 of the Interpretation Act 1978 does not apply, by virtue of subsection (4), so as to imply a power to make an order (“the new order”) treating that area (or any part of it) as if it were not so designated at times falling before the new order is made.

(6)Condition A is that the company is within the charge to corporation tax.

(7)Condition B is that the expenditure is incurred for the purposes of a qualifying activity within section 15(1)(a) or (f).

(8)Condition C is that the expenditure is incurred for the purposes of—

(a)a business of a kind not previously carried on by the company,

(b)expanding a business carried on by the company, or

(c)starting up an activity which relates to a fundamental change in a product or production process of, or service provided by, a business carried on by the company.

[F59(8A)Condition C is met by virtue of subsection (8)(c) only if the amount of the expenditure exceeds the amount by which the relevant plant or machinery is depreciated in the period of 3 years ending immediately before the beginning of the chargeable period in which the expenditure is incurred.

(8B)“Relevant plant or machinery” means the plant or machinery being used at the end of the period of 3 years mentioned in subsection (8A) for the purposes of the product, process or service mentioned in subsection (8)(c).]

(9)Condition D is that the plant or machinery is unused and not second-hand.

(10)Condition E is that the expenditure is not replacement expenditure.

(11)“Replacement expenditure” means expenditure incurred on the provision of plant or machinery (“new plant or machinery”) intended to perform the same or a similar function, for the purposes of the qualifying activity of the company, as other plant or machinery (“replaced plant or machinery”)—

(a)on which the company has previously incurred qualifying expenditure, and

(b)which has been superseded by the new plant or machinery.

(12)But if and to the extent that—

(a)the expenditure is incurred on the provision of new plant or machinery that is capable of and intended to perform a significant additional function, when compared to the replaced plant or machinery, and

(b)the additional function enhances the capacity or productivity of the qualifying activity in question,

so much of the expenditure as is attributable to the additional function is not to be regarded as replacement expenditure.

(13)The part of the expenditure attributable to the additional function is to be determined on a just and reasonable basis.

(14)In this section—

• “assisted area” means—

  (a)

  an area specified as a development area under section 1 of the Industrial Development Act 1982, or

  (b)

  Northern Ireland;

• “enterprise zone” means an area recognised by the Treasury as an area in respect of which there is a special focus on economic development and identified on a map published by the Treasury for the purposes of this section;

• “the responsible authority”, for an area, means—

  (a)

  if the area is in England, a local authority for all or part of the area or two or more such local authorities,

  (b)

  if the area is in Scotland, the Scottish Ministers,

  (c)

  if the area is in Wales, the Welsh Ministers, and

  (d)

  if the area is in Northern Ireland, the Department of Enterprise, Trade and Investment in Northern Ireland.

(15)The Treasury may by order amend the definition of “assisted area” in subsection (14) in consequence of any changes made to the areas in the United Kingdom granted assisted area status by virtue of Article 107(3) of the Treaty on the Functioning of the European Union.

(16)This section is subject to—

• section 45L (plant or machinery partly for use outside designated assisted areas),

• section 45M (exclusions from section 45K allowances),

• section 45N (effect of plant or machinery subsequently being primarily used in an area other than a designated assisted area), and

• section 46 (general exclusions).

45LExclusion of plant or machinery partly for use outside designated assisted areasU.K.

(1)Expenditure on plant or machinery is not first-year qualifying expenditure under section 45K if—

(a)at the time when it is incurred, the company incurring it intends the plant or machinery to be used partly in a non-designated area, and

(b)the main purpose, or one of the main purposes, for which any person is a party to the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use in a non-designated area.

(2)For the purposes of subsection (1)(b), the part of the expenditure that is attributable to that intended use in a non-designated area is to be determined on a just and reasonable basis.

(3)In this section—

• “non-designated area” means an area which is not a designated assisted area within the meaning of section 45K;

• “the relevant arrangements” means—

  (a)

  the transaction under which the expenditure is incurred, and

  (b)

  any scheme or arrangements of which that transaction forms part.

45MExclusions from allowances under section 45KU.K.

(1)Expenditure incurred by a person is not first-year qualifying expenditure under section 45K if it is within subsection (2), (4), [F60(7) or (7A)].

(2)Expenditure is within this subsection if, at the time a claim is made under section 3 for a section 45K allowance in respect of the expenditure, the person who incurred the expenditure is, or forms part of, an undertaking within subsection (3).

(3)An undertaking is within this subsection if one or both of the following conditions are met—

(a)it is reasonable to assume that the undertaking would be regarded as [F61an undertaking in difficulty for the purposes of the General Block Exemption Regulation];

(b)the undertaking is subject to an outstanding recovery order made by virtue of Article 108(2) of the Treaty on the Functioning of the European Union (Commission Decision declaring aid illegal and incompatible with the common market).

(4)Expenditure is within this subsection if it is incurred for the purposes of a qualifying activity—

(a)in the fishery or aquaculture sector, as covered by [F62Regulation (EU) No 1379/2013 of the European Parliament and of the Council],

(b)in the coal sector, steel sector, shipbuilding sector or synthetic fibres sector,

[F63(ba)in the transport sector or related infrastructure,

(bb)relating to energy generation, distribution or infrastructure,

(bc)relating to the development of broadband networks,]

(c)relating to the management of waste of undertakings, or

(d)relating to—

(i)the primary production of agricultural products,

(ii)on-farm activities necessary for preparing an animal or plant product for the first sale, or

(iii)the first sale of agricultural products by a primary producer to wholesalers, retailers or processors, in circumstances where that sale does not take place on separate premises reserved for that purpose.

[F64(4A)Expressions used in subsection (4)(b), (ba), (bb) or (bc) and in the General Block Exemption Regulation have the same meaning as in that Regulation.]

(5)In subsection (4)(c) the reference to waste of undertakings does not include waste of the person who incurred the expenditure or of any other person forming part of the same undertaking as that person.

F65(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)Expenditure is within this subsection if a relevant grant or relevant payment is made towards—

(a)that expenditure, or

(b)any other expenditure which is incurred by any person in respect of the same designated assisted area, and on the same single investment project, as that expenditure.

[F66(7A)Expenditure is within this subsection if—

(a)the area by reference to which the condition in section 45K(1)(a) is met is not an area which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union,

(b)the condition in section 45K(8)(a) is not met in relation to the expenditure, and

(c)at the time the expenditure is incurred the company is not an SME for the purposes of the General Block Exemption Regulation.]

(8)A section 45K allowance made in respect of first-year qualifying expenditure is to be withdrawn if—

(a)after it is made, a relevant grant or relevant payment is made towards that expenditure, or

(b)within the period of 3 years beginning when that expenditure was incurred, a relevant grant or relevant payment is made towards any other expenditure which is incurred by any person in respect of the same designated assisted area, and on the same single investment project, as that expenditure.

(9)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (8).

(10)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(11)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.

(12)In this section—

• “agricultural product”, [F67has] the same meaning as in the General Block Exemption Regulation;

• “General Block Exemption Regulation” means Commission Regulation [F68(EU) No 651/2014] (General block exemption Regulation)[F69as it had effect in the United Kingdom immediately before IP completion day];

• “management” and “waste” have the meaning given by Article 1 of Directive 2006/12/EC of the European Parliament and of the Council;

• “relevant grant or relevant payment” means a grant or payment which is—

  (a)

  a State aid, other than an allowance under this Part, or

  (b)

  a grant or subsidy, other than a State aid, which the Treasury by order declares to be relevant for the purposes of the witholding of a section 45K allowance;

• “section 45K allowance” means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45K;

• “single investment project” has the same meaning as in the General Block Exemption Regulation;

• “undertaking” means—

  (a)

  an autonomous enterprise, or

  (b)

  an enterprise (not within paragraph (a)) and its partner enterprises (if any) and its linked enterprises (if any),

  and for this purpose “enterprise”, “autonomous enterprise”, “partner enterprises” and “linked enterprises” have the meaning given by Annex 1 to the General Block Exemption Regulation.

(13)Nothing in this section limits references to “State aid” to State aid which is required to be notified to and approved by the European Commission.

(14)For the purposes of this section references to expenditure incurred in respect of a designated assisted area includes expenditure incurred on the provision of things for use primarily in that area or on services to be provided primarily in that area.

(15)The Treasury may by order make such provision amending this section as appears to them appropriate for the purpose of giving effect to any future amendments of or instruments replacing—

(a)the General Block Exemption Regulation,

(b)the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02),

[F70(c)Regulation (EU) No 1379/2013 of the European Parliament and of the Council,]

(d)Directive 2006/12/EC of the European Parliament and of the Council, or

(e)the Treaty on the Functioning of the European Union.

45NEffect of plant or machinery subsequently being primarily for use outside designated assisted areasU.K.

(1)Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45K if, at any relevant time—

(a)the primary use to which the plant and machinery is put is other than in an area which was a [F71relevant area] at the time the expenditure was incurred, or

(b)the plant or machinery is held for use otherwise than primarily in an area which was [F72a relevant] area at that time.

(2)“Relevant time” means a time which—

(a)falls within the relevant period, and

(b)is a time when the plant or machinery is owned by—

(i)the person who incurred the expenditure, or

(ii)a person who is, or at any time in that period has been, connected with that person.

(3)“The relevant period” means the period of 5 years beginning with—

(a)the day on which the plant or machinery in question is first brought into use for the purposes of a qualifying activity carried on by the company, or

(b)if earlier, the day on which it is first held for such use.

[F73(3A)“Relevant area” means—

(a)in relation to expenditure which would be within subsection (7A) of section 45M if paragraph (a) of that subsection were omitted, a designated assisted area within the meaning of section 45K which falls within Article 107(3)(a) of the Treaty on the Functioning of the European Union, and

(b)in relation to any other expenditure, a designated assisted area within the meaning of section 45K.]

(4)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).

(5)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(6)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.]

[F7445OExpenditure on plant and machinery for use in freeport tax sitesU.K.

(1)Expenditure incurred by a company on the provision of plant or machinery is first-year qualifying expenditure if conditions A to E are met.

(2)Condition A is that the plant or machinery is for use primarily in an area which, at the time the expenditure is incurred, is a freeport tax site.

(3)Condition B is that the plant or machinery is unused and is not second-hand.

(4)Condition C is that the expenditure is incurred for the purposes of a qualifying activity within section 15(1)(a) or (f).

(5)Condition D is that the expenditure is incurred on or before 30 September 2026.

(6)Condition E is that the company is within the charge to corporation tax.

(7)This section is subject to—

• regulations under section 45P,

• section 45Q (exclusion of plant or machinery partly for use outside freeport tax sites),

• [F75section 45R (effect of failing to comply with ongoing requirements) and regulations under that section, and]

• section 46 (general exclusions).

45PPower to amend conditionsU.K.

(1)The Treasury may by regulations change the conditions that must be met in order for expenditure to be first-year qualifying expenditure under section 45O (whether by adding, removing or altering conditions).

(2)Regulations under this section may not remove the requirement for the plant or machinery to be for use primarily in an area which, at the time the expenditure is incurred, is a freeport tax site.

(3)Regulations under this section may, among other things—

(a)make provision by reference to the expenditure, the plant or machinery, the company that incurred the expenditure or a person who is or has been connected with that company;

(b)impose conditions relating to accounts or other records;

(c)impose other conditions requiring a person to take steps specified in the regulations;

(d)make different provision for different purposes;

(e)include incidental, supplementary, consequential, transitional or transitory provision.

(4)Regulations under this section—

(a)may amend, repeal or otherwise modify section 45O and other provisions of this Part, and

(b)where made under subsection (3)(e), may amend, repeal or otherwise modify other provisions of this Act or provisions of another Act.

45QExclusion of plant or machinery partly for use outside freeport tax sitesU.K.

(1)This section applies if—

(a)at the time when expenditure on plant or machinery is incurred, the company incurring it intends the plant or machinery to be used partly in an area which is not a freeport tax site, and

(b)the main purpose, or one of the main purposes, for which a person is party to the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use in an area which is not a freeport tax site (the “non-freeport part” of the expenditure).

(2)The non-freeport part of the expenditure is not first-year qualifying expenditure under section 45O.

(3)For the purposes of this section, the non-freeport part of the expenditure is to be determined on a just and reasonable basis.

(4)In this section, “the relevant arrangements” means—

(a)the transaction under which the expenditure on the plant or machinery is incurred, and

(b)any scheme or arrangements of which that transaction forms part.

45REffect of [F76failing to comply with ongoing requirements] U.K.

(1)Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O if, at any relevant time—

(a)the primary use to which the plant or machinery is put is other than in an area which, at the time the expenditure was incurred, was a freeport tax site, or

(b)the plant or machinery is held for use otherwise than primarily in an area which was a freeport tax site at that time.

(2)“Relevant time” means a time within the relevant period when the plant or machinery is owned by—

(a)the company that incurred the expenditure, or

(b)a person who is, or at any time in that period has been, connected with that company.

(3)“The relevant period” means the period of 5 years beginning with—

(a)the day on which the plant or machinery in question is first brought into use for the purposes of a qualifying activity carried on by the company, or

(b)if earlier, the day on which it is first held for such use.

[F77(3A)The Treasury may by regulations make provision adding, removing or altering, or otherwise about, circumstances in which expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 45O.

(3B)The power to make regulations under subsection (3A) may be exercised only in relation to expenditure incurred on or after the date on which the regulations come into force.

(3C)Subsections (3) and (4) of section 45P apply in relation to regulations under subsection (3A) as they apply in relation to regulations under that section.]

(4)All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1) [F78or regulations under subsection (3A)].

(5)If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section [F79or of regulations under subsection (3A)], that person must give notice to an officer of Revenue and Customs specifying how the return needs to be amended.

(6)The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section [F80or of regulations under subsection (3A)].]

46F81 General exclusions ...U.K.

(1)Expenditure within any of the general exclusions in subsection (2) is not first-year qualifying expenditure under [F82any of the following provisions]—

• F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F86 section 45D (expenditure on cars with low CO₂ emissions),]

• [F87section 45DA (expenditure on zero-emission goods vehicles), ]

• [F88section 45E (expenditure on plant or machinery for gas refuelling station)], F89...

• [F90section 45EA (expenditure on plant or machinery for electric vehicle charging point)]

• [F91section 45F (expenditure on plant and machinery for use wholly in a ring fence trade)]

  F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• [F92section 45K (expenditure on plant and machinery for use in designated assisted areas).]

• [F93section 45O (expenditure on plant and machinery for use in freeport tax sites).]

(2)The general exclusions are—

• General exclusion 1

  The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.

• General exclusion 2

  The expenditure is incurred on the provision of a car (as defined by section [F94268A]).

• F95...

• F96...

• General exclusion 5

  The expenditure would be long-life asset expenditure but for paragraph 20 of Schedule 3 (transitional provisions).

• General exclusion 6

  The expenditure is on the provision of plant or machinery for leasing (whether in the course of a trade or otherwise).

  For this purpose, the letting of a ship on charter, or of any other asset on hire, is to be regarded as leasing (whether or not it would otherwise be so regarded).

• General exclusion 7

  The circumstances of the incurring of the expenditure are that—

  (a)

  the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of a trade or business carried on by a person other than the person incurring the expenditure, and

  (b)

  the obtaining of a first-year allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.

• General exclusion 8

  [F97Any] of the following sections applies—

  • section 13 (use for qualifying activity of plant or machinery provided for other purposes);

  • [F98section 13A (use for other purposes of plant or machinery provided for long funding leasing);]

  • section 14 (use for qualifying activity of plant or machinery which is a gift).

  This is subject to section 161 (pre-trading expenditure on mineral exploration and access).

[F99(3)Subsection (1) is subject to the following provisions of this section.

(4)General exclusion 2 does not prevent expenditure being first-year qualifying expenditure under section 45D.]

F100(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F100(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenditure of small or medium-sized enterprisesU.K.

F10147 Expenditure of small or medium-sized enterprises: companiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10148 Expenditure of small or medium-sized enterprises: businessesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10149 Whether company is a member of a large or medium-sized groupU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SupplementaryU.K.

50 Time when expenditure is incurredU.K.

In determining whether expenditure is first-year qualifying expenditure under this Chapter, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

F10251 Disclosure of information between UK tax authoritiesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .