Capital Allowances Act 2001

[F1 Part 1 U.K. Entitlement to first-year tax credits

Textual Amendments

F1 Sch. A1 inserted (with effect in accordance with Sch. 25 para. 9 of the amending Act) by Finance Act 2008 (c. 9), Sch. 25 para. 5

Entitlement to first-year tax credits U.K.

1 (1) A company may claim a first-year tax credit for a chargeable period in which it has a surrenderable loss, unless it is an excluded company in relation to that chargeable period. U.K.

(2) A company has a surrenderable loss in a chargeable period if in that chargeable period—

(a) a first-year allowance is made to the company in respect of relevant first-year expenditure (see paragraph 3) incurred for the purposes of a qualifying activity the profits of which are chargeable to corporation tax, and

(b) the company incurs a loss in carrying on that qualifying activity (see paragraphs 4 to 9).

(3) The amount of the surrenderable loss is equal to—

(a) so much of the loss incurred in carrying on the qualifying activity as is unrelieved (see paragraphs 10 to 16), or

(b) if less, the amount of the first-year allowance made in respect of the relevant first-year expenditure in the chargeable period in question.

(4) A company is an excluded company in relation to a chargeable period if at any time during that period it is [F2 entitled to make—

(a) a claim under section 642 or 643 of CTA 2010 (reliefs for co-operative housing associations),

(b) a claim under section 651 or 652 of CTA 2010 (reliefs for self-build societies), or

(c) a relevant claim under Part 11 of CTA 2010 (charitable companies etc).]

[F3 (5) For the purposes of sub-paragraph (4)(c) a claim under Part 11 of CTA 2010 is a relevant claim unless—

(a) it is a claim for exemption under—

(i) section 475 or 476 (reliefs for certain heritage bodies etc),

(ii) section 480 (exemption for profits of small-scale trades), or

(iii) section 481 (exemption from charges under provisions to which section 1173 of CTA 2010 applies), or

(b) the company is entitled to make it only by virtue of section 490 (application of exemptions to certain heritage bodies etc).]

Textual Amendments

F2 Words in Sch. A1 para. 1(4) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(2)(a) (with Sch. 2)

F3 Sch. A1 para. 1(5) inserted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(2)(b) (with Sch. 2)

Amount of first-year tax credit U.K.

2 (1) The amount of the first-year tax credit to which a company is entitled for a chargeable period in which it has a surrenderable loss is an amount equal to— U.K.

(a) 19% of the amount of the surrenderable loss for the chargeable period, or

(b) if the amount mentioned in paragraph (a) exceeds the upper limit, the upper limit.

(2) The upper limit is the greater of—

(a) the total amount of the company's PAYE and NICs liabilities for payment periods ending in the chargeable period (see paragraph 17), and

(b) £250,000.

(3) A company which is entitled to an amount of first-year tax credit may claim the whole amount or part only of the amount.

(4) The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1)(a) such other percentage as it thinks fit.

(5) An order under sub-paragraph (4) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

Meaning of “relevant first-year expenditure” U.K.

3 (1) In this Schedule “relevant first-year expenditure” means expenditure which— U.K.

(a) is first-year qualifying expenditure by virtue of section 45A (energy-saving plant or machinery) or section 45H (environmentally beneficial plant or machinery), and

(b) is incurred in the period beginning with 1 April 2008 and ending with [F4 31 March 2018],

but does not include expenditure which is treated as first-year qualifying expenditure within paragraph (a) by virtue of section 236 (additional VAT liability treated as expenditure).

(2) In determining whether expenditure is relevant first-year expenditure, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.

(3) The Treasury may by order substitute, for the date for the time being specified in sub-paragraph (1)(b) as the date with which the period ends, such later date as it thinks fit.

(4) An order under sub-paragraph (3) may make such incidental, supplemental, consequential and transitional provision as the Treasury thinks fit.

Textual Amendments

F4 Words in Sch. A1 para. 3(1)(b) substituted (28.3.2013) by The Capital Allowances (First-year Tax Credits) Order 2013 (S.I. 2013/464), arts. 1, 2

Incurring a loss in carrying on a qualifying activity U.K.

4 U.K. Paragraphs 5 to 9 apply for the interpretation of paragraph 1(2)(b).

5 (1) This paragraph applies where the qualifying activity is [F5 an ordinary UK property business or an ordinary overseas property business] and paragraph 7 does not apply. U.K.

(2) References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss incurred in carrying on that part of the business (if any) to which [F6 sections 62 and 63 of CTA 2010 (UK property business losses) apply (see section 64 of that Act)].

Textual Amendments

F5 Words in Sch. A1 para. 5(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(a)

F6 Words in Sch. A1 para. 5(2) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(3) (with Sch. 2)

6 (1) This paragraph applies where the qualifying activity is an overseas property business and paragraph 7 does not apply. U.K.

(2) References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss incurred in carrying on that part of the business (if any) to which [F7 section 66 of CTA 2010] (losses from overseas property business) applies [F8 (see section 67 of that Act)].

Textual Amendments

F7 Words in Sch. A1 para. 6(2) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(4)(a) (with Sch. 2)

F8 Words in Sch. A1 para. 6(2) inserted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(4)(b) (with Sch. 2)

7 (1) This paragraph applies where— U.K.

(a) the qualifying activity is a [F9 UK property business] or an overseas property business, and

(b) the company is an insurance company.

(2) References in this Schedule to a loss incurred in carrying on the qualifying activity are to a loss [F10 which, as a result of section 87(3) of FA 2012, is treated for the purposes of section 76 of that Act as a deemed BLAGAB management expense for an accounting period ].

(3) Where the insurance company is treated under section [F11 section 86] of that Act as carrying on more than one [F12 UK property business] or overseas property business, references in this Schedule to a loss incurred in carrying on the qualifying activity are to be construed in accordance with section [F11 section 87(4)]) of that Act (aggregation of losses).

Textual Amendments

F9 Words in Sch. A1 para. 7(1)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(3)(a) (with Sch. 2 Pts. 1, 2)

F10 Words in Sch. A1 para. 7(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(2)(a)

F11 Words in Sch. A1 para. 7(3) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(2)(b)

F12 Words in Sch. A1 para. 7(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(3)(b) (with Sch. 2 Pts. 1, 2)

8 (1) This paragraph applies where the qualifying activity is managing the investments of a company with investment business. U.K.

(2) The company incurs a loss in carrying on that activity in a chargeable period if in that chargeable period—

[F13 (a) the sum of the amounts mentioned in section 1223(2) of CTA 2009, exceeds]

(b) the amount of the profits from which those expenses and charges are deductible,

and the amount of the loss is the amount of the excess.

Textual Amendments

F13 Sch. A1 para. 8(2)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(4) (with Sch. 2 Pts. 1, 2)

9 (1) This paragraph applies where the qualifying activity is [F14 basic life assurance and general annuity business] and the profits of that business are charged to tax [F14 in accordance with the I - E rules]. U.K.

(2) The company incurs a loss in a chargeable period if in that chargeable period an amount falls to be carried forward to a succeeding chargeable period under [F15 section 73 of FA 2012] (carrying forward unrelieved expenses).

(3) The amount of the loss is the amount which falls to be so carried forward.

Textual Amendments

F14 Words in Sch. A1 para. 9(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(3)(a)

F15 Words in Sch. A1 para. 9(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(3)(b)

Unrelieved loss U.K.

10 U.K. Paragraphs 11 to 16 apply for the interpretation of paragraph 1(3)(a).

11 (1) This paragraph applies where the qualifying activity is a trade [F16 , a UK furnished holiday lettings business or an EEA furnished holiday lettings business] and paragraph 14 or 16 does not apply. U.K.

(2) The amount of the loss that is unrelieved is the amount of the loss, reduced by the amount of—

(a) any relief that was or could have been obtained by the company making a claim under [F17 section 37(3)(a) of CTA 2010 to deduct the loss from total profits] of the same chargeable period,

(b) any other relief obtained by the company making a claim under [F18 section 37(3)(b) or 42 of that Act (losses deducted from] profits of an earlier chargeable period),

(c) any loss that was or could have been surrendered under [F19 Part 5] of that Act (surrender of relief to group or consortium members),

(d) any loss surrendered under a relevant tax credit provision, and

(e) any amount set off against the loss under [F20 Chapter 7 of Part 4] of that Act (write-off of government investment).

(3) For this purpose no account is to be taken of any losses—

(a) brought forward from an earlier chargeable period under [F21 section 45 of CTA 2010],

(b) carried back from a later chargeable period under [F22 section 37(3)(b) or 42] of that Act, or

(c) incurred on a leasing contract (within the meaning of [F23 section 53] of that Act) in circumstances to which that section applies.

(4) In sub-paragraph (2)(d) “relevant tax credit provision” means—

[F24 (a) Chapter 2 or 7 of Part 13 of CTA 2009 (tax credits for expenditure on research and development or vaccine research etc),

(b) Chapter 3 of Part 14 of that Act (tax credits for remediation of contaminated land), [F25 and]

(c) Chapter 3 of Part 15 of that Act (film tax credits).]

[F26 (d) Chapter 3 of Part 15A of that Act (television tax credits), and

(e) Chapter 3 of Part 15B of that Act (video game tax credits).]

Textual Amendments

F16 Words in Sch. A1 para. 11(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(b)

F17 Words in Sch. A1 para. 11(2)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(a) (with Sch. 2)

F18 Words in Sch. A1 para. 11(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(b) (with Sch. 2)

F19 Words in Sch. A1 para. 11(2)(c) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(c) (with Sch. 2)

F20 Words in Sch. A1 para. 11(2)(e) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(d) (with Sch. 2)

F21 Words in Sch. A1 para. 11(3)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(e) (with Sch. 2)

F22 Words in Sch. A1 para. 11(3)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(f) (with Sch. 2)

F23 Words in Sch. A1 para. 11(3)(c) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(5)(g) (with Sch. 2)

F24 Sch. A1 para. 11(4)(a)-(c) substituted for Sch. A1 para. 11(4)(a)-(d) (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(5) (with Sch. 2 Pts. 1, 2)

F25 Word in Sch. A1 para. 11(4)(b) omitted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by virtue of Finance Act 2013 (c. 29), Sch. 18 paras. 6, 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

F26 Sch. A1 para. 11(4)(d)(e) inserted (with effect in accordance with Sch. 18 para. 23 of the amending Act) by Finance Act 2013 (c. 29), Sch. 18 paras. 6, 22; S.I. 2013/1817, art. 2(2); S.I. 2014/1962, art. 2(3)

12 (1) This paragraph applies where the qualifying activity is [F27 an ordinary UK property business or an ordinary overseas property business] and paragraph 14 does not apply. U.K.

(2) The amount of the loss that is unrelieved is the amount of the loss, reduced by the amount of—

(a) any relief that was or could have been obtained by the company making a claim under [F28 section 62(1) to (3) of CTA 2010 to deduct the loss from total profits] of the same chargeable period,

(b) any loss that was or could have been surrendered under [F29 Part 5] of that Act (surrender of relief to group or consortium members),

(c) any loss surrendered under [F30 Chapter 3 of Part 14 of CTA 2009] (tax credits for remediation of contaminated land), and

(d) any amount set off against the loss under [F31 Chapter 7 of Part 4 of CTA 2010] (write-off of government investment).

(3) For this purpose, no account is to be taken of any losses brought forward from an earlier chargeable period under [F32 section 62(5) of CTA 2010].

Textual Amendments

F27 Words in Sch. A1 para. 12(1) substituted (with effect in accordance with Sch. 14 para. 13 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 12(16)(c)

F28 Words in Sch. A1 para. 12(2)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(6)(a) (with Sch. 2)

F29 Words in Sch. A1 para. 12(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(6)(b) (with Sch. 2)

F30 Words in Sch. A1 para. 12(2)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(6)(b) (with Sch. 2 Pts. 1, 2)

F31 Words in Sch. A1 para. 12(2)(d) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(6)(c) (with Sch. 2)

F32 Words in Sch. A1 para. 12(3) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(6)(d) (with Sch. 2)

13 (1) This paragraph applies where the qualifying activity is an overseas property business and paragraph 14 does not apply. U.K.

(2) The amount of the loss that is unrelieved is the amount of the loss, reduced by any amount set off against the loss under [F33 Chapter 7 of Part 4 of CTA 2010] (write-off of government investment).

(3) For this purpose, no account is to be taken of any losses brought forward from an earlier chargeable period under [F34 section 66 of CTA 2010].

Textual Amendments

F33 Words in Sch. A1 para. 13(2) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(7)(a) (with Sch. 2)

F34 Words in Sch. A1 para. 13(3) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(7)(b) (with Sch. 2)

14 (1) This paragraph applies where— U.K.

(a) the qualifying activity is a [F35 UK property business] or an overseas property business, and

(b) the company is an insurance company.

(2) If no amount falls to be carried forward to a succeeding chargeable period under [F36 section 73 of FA 2012] (carrying forward unrelieved expenses), no amount of the loss is unrelieved.

(3) If an amount falls to be carried forward to a succeeding chargeable period under [F37 section 73] of that Act, the amount of the loss that is unrelieved is equal to the lesser of—

(a) the amount of the loss (see paragraph 7), reduced by any amount within sub-paragraph (4), and

(b) the total amount which so falls to be carried forward.

(4) The amounts mentioned in sub-paragraph (3)(a) are—

(a) the amount of any loss surrendered under [F38 Chapter 3 of Part 14 of CTA 2009] (tax credits for remediation of contaminated land), and

(b) any amount [F39 set off against the loss under Chapter 7 of Part 4 of CTA 2010] (write-off of government investment).

(5) Sub-paragraph (6) applies for determining whether there is an amount which falls to be carried forward under [F40 section 73 of FA 2012] .

[F41 (6) Disregard any amounts brought forward from an earlier chargeable period which fall to be taken into account in calculating for the purposes of section 73 of FA 2012 the amount of adjusted BLAGAB management expenses of the company for the period in question as a result of—

(a) the previous application of section 73 or 93 of FA 2012, or

(b) the carry forward to the period in question of an amount under section 391(3) of CTA 2009 (loan relationship deficit carried forward).]

Textual Amendments

F35 Words in Sch. A1 para. 14(1)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(7)(a) (with Sch. 2 Pts. 1, 2)

F36 Words in Sch. A1 para. 14(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(4)(a)

F37 Words in Sch. A1 para. 14(3) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(4)(b)

F38 Words in Sch. A1 para. 14(4)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(7)(b) (with Sch. 2 Pts. 1, 2)

F39 Words in Sch. A1 para. 14(4)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(8) (with Sch. 2)

F40 Words in Sch. A1 para. 14(5) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(4)(c)

F41 Sch. A1 para. 14(6) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(4)(d)

15 (1) This paragraph applies where the qualifying activity is managing the investments of a company with investment business. U.K.

(2) The amount of the loss that is unrelieved is the amount of the loss (see paragraph 8), reduced by the amount of—

(a) any loss that was or could have been surrendered under [F42 Part 5 of CTA 2010] (surrender of relief to group or consortium members), and

(b) any amount set off against the loss under [F43 Chapter 7 of Part 4] of that Act (write-off of government investment).

(3) For this purpose, no account is to be taken of any amount brought forward from an earlier chargeable period under [F44 section 1223 of CTA 2009].

Textual Amendments

F42 Words in Sch. A1 para. 15(2)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(9)(a) (with Sch. 2)

F43 Words in Sch. A1 para. 15(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(9)(b) (with Sch. 2)

F44 Words in Sch. A1 para. 15(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(8) (with Sch. 2 Pts. 1, 2)

16 (1) This paragraph applies where the qualifying activity is [F45 basic life assurance and general annuity business] and the profits of that business are charged to tax [F45 in accordance with the I - E rules]. U.K.

(2) The amount of the unrelieved loss is the amount of the loss (see paragraph 9), reduced by—

(a) any loss surrendered under [F46 Chapter 4 of Part 14 of CTA 2009] (tax credits for remediation of contaminated land), and

(b) any amount set off against the loss under [F47 Chapter 7 of Part 4 of CTA 2010] (write-off of government investment).

[F48 (3) For this purpose, no account is to be taken of any amounts brought forward from an earlier chargeable period which fall to be taken into account in calculating for the purposes of section 73 of FA 2012 the amount of adjusted BLAGAB management expenses of the company for the period in question as a result of—

(a) the previous application of section 73 or 93 of FA 2012, or

(b) the carry forward to the period in question of an amount under section 391(3) of CTA 2009 (loan relationship deficit carried forward).]

Textual Amendments

F45 Words in Sch. A1 para. 16(1) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(5)(a)

F46 Words in Sch. A1 para. 16(2)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 521(9)(a) (with Sch. 2 Pts. 1, 2)

F47 Words in Sch. A1 para. 16(2)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 364(10) (with Sch. 2)

F48 Sch. A1 para. 16(3) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 106(5)(b)

Total amount of company's PAYE and NICs liabilities U.K.

17 (1) For the purposes of paragraph 2(2)(a) the total amount of the company's PAYE and NICs liabilities for a payment period is the total of— U.K.

(a) the amount of income tax for which the company is required to account to HMRC for that period under the PAYE regulations, disregarding any deduction the company is authorised to make in respect of child tax credit or working tax credit, and

(b) the Class 1 national insurance contributions for which the company is required to account to HMRC for that period, disregarding any deduction the company is authorised to make in respect of payments of statutory sick pay, statutory maternity pay, child tax credit or working tax credit.

(2) A “payment period” means a period which ends on the 5th day of a month and for which the company is liable to account for income tax and national insurance contributions to HMRC.]