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Capital Allowances Act 2001

Section 486: Pre-trading expenditure of qualifying trades, etc.

1734.This section is based on sections 134(7) and 135(2) of CAA 1990. It deals with pre-trading expenditure.

1735.Subsection (1) deals with pre-trading expenditure and deems it to be incurred on the first day that the trade is carried on.

1736.Subsection (2) deals with expenditure if the premises in connection with which the expenditure was incurred are not yet occupied for the purposes of the trade. This could be if the expenditure is in connection with an existing trade but could also be if the expenditure is incurred before the trade is carried on. The expenditure is treated as incurred when the premises are occupied for the purposes of the trade.

1737.If expenditure is incurred before both:

  • the trade has begun; and

  • the premises are occupied,

then the expenditure is treated as incurred when both the premises are occupied and the trade carried on. See Change 57 in Annex 1.

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