Capital Allowances Act 2001

59 Unrelieved qualifying expenditureU.K.

(1)A person has unrelieved qualifying expenditure to carry forward from a chargeable period if for that period—

[F1(a)]AQE exceeds TDR[F2, and

( b)where section 56A(2) applies, the person does not claim a writing-down allowance of the amount by which AQE exceeds TDR.]

(2)The amount of the unrelieved qualifying expenditure is—

(a)the excess less the writing-down allowance made for the period, or

(b)if no writing-down allowance is claimed for the period, the excess.

(3)No amount may be carried forward as unrelieved qualifying expenditure from the final chargeable period.

[F3(4)If a person carrying on a trade, profession or vocation enters the cash basis for a tax year, [F4any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in a pool for the trade, profession or vocation] from the chargeable period ending with the basis period for the previous tax year.

[F5(4A)If a person carrying on a property business enters the cash basis for a tax year, any cash basis deductible amount may not be carried forward as unrelieved qualifying expenditure in a pool for a relevant qualifying activity from the chargeable period which is the previous tax year.]

F6(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F7(5A)A “cash basis deductible amount” means any amount of unrelieved qualifying expenditure for which a deduction would be allowed in calculating the profits of the trade, profession, vocation or property business (as the case may be) on the cash basis on the assumption that the expenditure was paid in the tax year for which the person enters the cash basis.]

(6)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated to a single asset pool, [F8any cash basis deductible amount] is to be determined on such basis as is just and reasonable in all the circumstances.

[F9(7)Subsections (9), (10) and (11) of section 1A (capital allowances and charges: cash basis) apply for the purposes of this section as they apply for the purposes of that section.]

(7A)In subsection (4A) “relevant qualifying activity” means—

(a)in relation to a UK property business, an ordinary UK property business and a UK furnished holiday lettings business, and

(b)in relation to an overseas property business, an ordinary overseas property business and an EEA furnished holiday lettings business.]

[F10(8)Subsection (9) applies if—

(a)a person carrying on a trade, profession or vocation incurs expenditure in relation to a vehicle,

(b)at the end of the basis period for a tax year, the person has unrelieved qualifying expenditure incurred in relation to the vehicle to carry forward from the chargeable period ending with that basis period (“the relevant chargeable period”), [F11and]

(c)in calculating the profits of a trade, profession or vocation of a person for the following tax year, a deduction is made under section 94D of ITTOIA 2005 in respect of expenditure incurred in relation to the vehicle, F12...

F12(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)None of the unrelieved qualifying expenditure incurred in relation to the vehicle may be carried forward as unrelieved qualifying expenditure from the relevant chargeable period.

[F13(9A)Subsection (9B) applies if—

(a)a person carrying on a property business incurs expenditure in relation to a vehicle,

(b)at the end of a tax year, the person has unrelieved qualifying expenditure incurred in relation to the vehicle to carry forward from the chargeable period ending with that tax year (“the relevant chargeable period”), and

(c)in calculating the profits of a property business of a person for the following tax year, a deduction is made under section 94D of ITTOIA 2005 (as applied by section 271E of that Act) in respect of expenditure incurred in relation to the vehicle.

(9B)None of the unrelieved qualifying expenditure incurred in relation to the vehicle may be carried forward as unrelieved qualifying expenditure from the relevant chargeable period.]

(10)Where a person has unrelieved qualifying expenditure to carry forward from a chargeable period that is not expenditure allocated to a single asset pool, the amount of the unrelieved qualifying expenditure incurred in relation to the vehicle is to be determined on such basis as is just and reasonable in all the circumstances.]