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HMRC internal manual

Business Leasing Manual

Calculating the income amount: Quantifying the TWDV amount - transactions on or after 23 March 2011

Section 403 CTA2011

This guidance applies to transactions where the relevant day falls on or after 23 March 2011.

The accounting period of the lessor company is brought to a close on the relevant day, the day of the sale etc of the company. A new accounting period, and so a new chargeable period, starts on the following day. The normal rules for computing writing down allowances apply.

The TWDV amount is found by adding together:

  • unrelieved expenditure in single asset pools,
  • unrelieved expenditure in class pools, and
  • unrelieved expenditure in the main pool

carried forward into the new chargeable period under section 59 CAA 2001.

This figure is adjusted to exclude any amounts which relate to ‘relevant new expenditure’.

Relevant new expenditure means:

  • Expenditure on plant or machinery acquired on the relevant day unless it was acquired from an associated company.
  • Expenditure incurred on the relevant day but attributable to plant or machinery acquired by the lessor company before that day.

‘Plant or machinery acquired’ includes plant or machinery brought into use for the first time and both ‘incurred’ and ‘acquired’ include anything that is treated as acquired or incurred.

These adjustments ensure that there is consistency between assets reflected in the PM figure and assets reflected in the TWDV figure.