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HMRC internal manual

Business Income Manual

Cash basis: expenses: capital expenditure: Land

S33A(4)(d) ITTOIA 2005

In calculating the profits of a trade under the cash basis a deduction is not allowed for an item of a capital nature on, or in connection with the provision, alteration or disposal of land.  This includes any depreciating capital assets which have been provided as part of the land. 

Assets that are provided as part of the land are any assets that are installed on the land, or otherwise fixed to the land so as to become part of the land in law. However, if a person incurs expenditure on a depreciating capital asset which is then installed on the land, or otherwise fixed to the land so as to become part of the land in law a deduction will not be prevented unless it is incurred on or in connection with the provision of   

  • a building
  • a wall, floor, ceiling, door, gate, shutter or window or stairs
  • a waste disposal system
  • a sewerage or drainage system or
  • a shaft or other structure in which a lift, hoist, escalator or moving walkway may be installed

A depreciating asset is one whose useful life will end or will decline in value by 90% or more within 20 years of the date of the expenditure.

The useful life of an asset ends when it could no longer be of any use to any person for any purpose, as an asset of the business.