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HMRC internal manual

Capital Allowances Manual

PMA: Qualifying expenditure: Annual Investment Allowance (AIA) qualifying expenditure: Restrictions applying to unincorporated businesses

CAA01/S38A and S38B, S51A to S51N

Restrictions affecting qualifying activities under common control

These restrictions (CAA01/S51H) apply to businesses other than companies.

Where two or more qualifying activities (in this context, either a business carried on by an individual or by individuals in partnership) are carried on or controlled by the same person (or persons), and are “related” to one another, then that person (or those persons), are entitled to a single AIA that may be allocated between the qualifying activities in any way the person (or persons) think fit.

A qualifying activity is controlled by a particular person (or persons) in a particular tax year (that is, 6 April to 5 April following) if it is controlled by the person (or persons) at the end of the chargeable period for the activity ending in that tax year.

The single AIA may be allocated against any qualifying AIA expenditure incurred by the related businesses in the chargeable periods of those businesses ending in the tax year in question.

Meaning of “control”

  • A qualifying activity is controlled by a person in a tax year if it is controlled by the person at the end of the chargeable period for that activity ending in that tax year.
  • A qualifying activity carried on by an individual is controlled by the individual who carries it on.
  • A qualifying activity carried on by a partnership is controlled by the person(s) who control the partnership. Section 574(3) CAA01 defines “control” in relation to a partnership and
  • Where persons between them control more than one partnership the partnerships are to be treated as controlled by the same person.

A qualifying activity is related to another in a tax year if one or both of the

  • the Shared premises condition CA23090 and
  • the similar activities condition CA23090 

are met in relation to the activities in the tax year.


Maureen owns two shops, a shoe shop and a hat shop. She does not control any other unincorporated businesses. She has owned the shoe shop for many years, but only purchased the hat shop from Cass on 1 June 2009, that is, part way through the 2008-09 tax year. The two shops were both controlled by Maureen at the relevant time (at 5 April 2009) and constitute “related” qualifying activities CA23090. So Maureen must allocate one AIA between the AIA qualifying expenditure incurred in the chargeable period of each ending in 2008-09.

The shoe shop has a chargeable period which ended on 30/9/08, so Maureen can only allocate a maximum time-apportioned AIA of £24,247 (177/365 days x £50,000 = £24, 247) to that business for that transitional chargeable period CA23085. As it happens, Maureen spent £10,000 replacing the electrical system of the shoe shop in August 2008.

The hat shop has a short first chargeable period, running from the date when Maureen bought it, on 1/6/08, until 5/4/09, so its maximum time-apportioned AIA is £42, 329 (309/365 x £50,000 = £42,329). Maureen incurred £40,000 on plant and machinery (new fixtures and fittings) for that shop in 2008-09.

Maureen decides to allocate the £50,000 AIA: £10,000 to the shoe shop and £40,000 to the hat shop for the 2008-09 tax year.