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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): Mineral extraction: exploration expenditure

Part 5 Capital Allowances Act 2001

The scope of a mineral extraction trade does not include exploring for new sources of mineral deposits. Therefore, expenditure incurred in prospecting for new mineral sources, including experimental boring, is capital expenditure, or abortive capital expenditure. This is because the expenditure is used to acquire the fixed capital assets of the trade.

Capital allowances in the form of mineral extraction allowances are available for qualifying capital expenditure on mineral exploration (see CA50230). Similarly, capital allowances are available for some pre-trading exploration expenditure (see CA50250 to CA50270).

For the tax treatment of expenditure to enhance an existing mine by locating new pockets and lost seams, see BIM62010.