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HMRC internal manual

Business Income Manual

Business successions: capital allowances apportionment

Where assets qualify for capital allowances, the allowances are due on the capital expenditure incurred by the purchaser and not on the fair value of the assets. Where there is a sale of property together with other property, S562 Capital Allowances Act 2001 requires a just apportionment to be made of ‘the net proceeds of sale of the whole property’. If the purchaser takes over liabilities as well as assets then the assumption of those liabilities is part of the purchase price. So in the example in BIM33720 the trader would be due capital allowances on £1,000 for the van because a just and reasonable apportionment of the total purchase price of £6,000 is to allocate that amount to the van (see CA12100).

The capital allowances are due when the expenditure is incurred, CAA01/S5(1)-(3) (see CA11800).