Finance Act 2013

CAA 2001 U.K.

46 U.K. In section 1 of CAA 2001 (capital allowances), after subsection (3) insert—

“(4) But a person is not entitled to any allowance or liable to any charge under this Act in calculating the profits of a trade, profession or vocation of the person in relation to which an election under section 25A of ITTOIA 2005 (cash basis for small businesses) has effect, other than an allowance in respect of expenditure incurred on the provision of a car (or a charge in connection with such an allowance).

(5) In subsection (4) “car” has the same meaning as in Part 2 (see section 268A).”

47 U.K. In section 59 of CAA 2001 (unrelieved qualifying expenditure), after subsection (3) insert—

“(4) If a person carrying on a trade, profession or vocation enters the cash basis for a tax year, no amount may be carried forward as unrelieved qualifying expenditure from the chargeable period ending with the basis period for the previous tax year.

(5) But subsection (4) does not apply to unrelieved qualifying expenditure incurred on the provision of a car.

(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, the amount of unrelieved qualifying expenditure incurred on the provision of a car is to be determined on such basis as is just and reasonable in all the circumstances.

(7) Section 240B of ITTOIA 2005 (meaning of “entering the cash basis”) applies for the purposes of this section as it applies for the purposes of Chapter 17A of Part 2 of that Act.”

48 U.K. In Chapter 5 of Part 2 of CAA 2001 (plant and machinery allowances and charges), after section 66 insert—

“Application of Chapter to person leaving cash basis U.K.

66A Persons leaving cash basis

(1) This section applies if—

(a) a person carrying on a trade, profession or vocation leaves the cash basis in a chargeable period, and

(b) the person has at any time incurred expenditure which, if an election under section 25A of ITTOIA 2005 (cash basis for small businesses) had not had effect at that time, would have been qualifying expenditure.

(2) In this section—

(a) the “relieved portion” of the expenditure is the amount of that expenditure for which—

(i) a deduction was allowed in calculating the profits of the trade, profession or vocation, or

(ii) a deduction would have been so allowed if the expenditure had been incurred wholly and exclusively for the purposes of the trade, profession or vocation;

(b) the “unrelieved portion” of the expenditure is any remaining amount of the expenditure.

(3) For the purposes of determining any entitlement of the person to an annual investment allowance or a first-year allowance, the person is to be treated as incurring the unrelieved portion of the expenditure in the chargeable period.

(4) For the purposes of determining the person's available qualifying expenditure in a pool for the chargeable period (see section 58)—

(a) the whole of the expenditure must be allocated to the appropriate pool (or pools) in that chargeable period, and

(b) the available qualifying expenditure in a pool to which the expenditure (or some of it) is allocated is reduced by the relieved portion of that expenditure.

(5) For the purposes of determining any disposal receipts (see section 60), the expenditure incurred by the person is to be regarded as qualifying expenditure.

(6) For the purposes of this section a person carrying on a trade, profession or vocation leaves the cash basis in a chargeable period if—

(a) immediately before the beginning of the chargeable period an election under section 25A had effect in relation to the trade, profession or vocation, and

(b) such an election does not have effect in relation to the trade, profession or vocation for the chargeable period.”