Finance Act 2021

13 Disposal of assets where SR allowance made

(1) This section applies to plant or machinery in respect of which a person incurred SR allowance expenditure in a chargeable period (“the allowance period”) if an SR allowance was made in respect of some or all of that expenditure.

(2) Where a disposal event occurs in relation to plant or machinery to which this section applies, the person who incurred relevant SR expenditure in respect of it is liable to a balancing charge for the chargeable period in which the event occurs (whether or not the person is also liable to any other balancing charge for that period).

(3) The amount of the balancing charge is the relevant proportion of the disposal value of the plant or machinery (see sections 61 to 63 of CAA 2001 which, among other provisions of Part 2 of that Act, contain provision about disposal values).

(4) The relevant proportion is determined by—

(a) dividing the amount of relevant SR allowance expenditure incurred in respect of the plant or machinery by 2, and

(b) dividing that amount by the amount of total relevant expenditure in relation to the plant or machinery.

(5) For the purposes of this section—

• SR allowance expenditure is “relevant” if an SR allowance was made in respect of it;

• “total relevant expenditure” in relation to plant or machinery means the sum of the following expenditure incurred in respect of it—

  (a)

  relevant SR allowance expenditure,

  (b)

  any expenditure in respect of which any other first-year allowance was made, and

  (c)

  any expenditure that is not relevant SR allowance expenditure that was allocated to a pool for any chargeable period (including for the period in which the disposal event occurs).

(6) In relation to the chargeable period in which the disposal event occurred, TDR (see section 55(1)(b) of CAA 2001) for the pool to which the SR allowance expenditure in respect of the plant or machinery was allocated is to be reduced by the amount of the balancing charge.

(7) Section 135(1) of CAA 2001 (claim for deferment of balancing charges) does not apply in relation to a disposal event in respect of a ship to which this section applies.

(8) This section has effect in relation to disposals occurring on or after 1 April 2021.