Commentary

D7.919 Capital allowances

Corporate tax
Corporate tax | Commentary

D7.919 Capital allowances

Corporate tax | Commentary

Capital expenditure

D7.919 Capital allowances

Most expenditure incurred in a petroliferous trade qualifies for capital allowances. The following table summarises the allowances generally available:

Type of paymentType of allowanceReference
Licence paymentsMineral extraction allowanceFirst-year or writing down allowances. See B3.419, B3.354
Site restorationMineral extraction allowance First-year or writing down allowances. See B3.409
Reimbursed exploration costsMineral extractionFirst-year or writing down allowances. See B3.419, B3.354
Exploration and appraisalResearch and developmentB3.711
Tangible development drillingPlant and machineryFirst-year or writing down allowances. See B3.324C
Production facilitiesPlant and machineryFirst-year or writing down allowances. See B3.324C
PipelinesPlant and machineryFirst-year or writing down allowances. See B3.324C
Long-life assetsPlant and machineryFirst-year (for expenditure incurred on or after 12 March 2008) or writing down allowances. See B3.324C
Plant and machinery partly used in ring fence trade and partly in another qualifying tradePlant and machineryTemporary first-year allowance of 100% for expenditure between 1 April 2021 and before 1 April 2023, see B3.324C
Onshore buildingsStructures and buildings allowance/Industrial buildings allowanceDivision B3.2

Where expenditure incurred after 9 March 1982, on an asset, is allowable for petroleum revenue tax purposes and is met by a regional development grant then, for the purposes of giving capital allowances within the ring fence trade, the grant must be deducted from qualifying expenditure. If the grant covers both qualifying and non-qualifying assets an apportionment is made. No restriction is required to the non-ring fence expenditure1.

Research and development allowances

As to research and development allowances generally, see Divisions B3.7 and D1.4.

Most

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