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HMRC internal manual

Capital Allowances Manual

PMA: Fixtures: Disposal values

CAA01/S196

The table below sets out the disposal values for the various disposal events. However, the disposal value will normally be limited under CAA01/S62 to the qualifying expenditure incurred on its provision by the person bringing the disposal value to account. There is one exception to this: If the person bringing the disposal value to account acquired the asset from a connected person or in a series of transactions between connected parties, the disposal value is limited to the greatest qualifying expenditure incurred by anyone in the chain.  

Disposal event Disposal value
   
Sale of the qualifying interest at or above market value. The part of the sale price on which the buyer can claim PMAs as expenditure on the provision of the fixture.
If the buyer cannot claim PMAs, the sale price of the fixture is that part of the sale price on which the buyer would be able to claim PMAs if a claim were possible.    
     
  Sale of the qualifying interest for less than market value. Market value unless:
  • the buyer’s expenditure on the acquisition of the fixture qualifies for PMAs, and
  • the buyer is not a dual resident investing company (See CTM34560) that is connected with the seller.
In that case the disposal value is that part of the sale price on which the buyer can claim capital allowances as expenditure on the provision of the fixture.    
     
  Transfer of the qualifying interest other than by way of sale. Market value
     
  Expiry of the qualifying interest. Nil unless the person receives a capital sum by way of compensation or otherwise.
If the person receives a capital sum by way of compensation or otherwise by reference to the fixture, the disposal value of the fixture is that capital sum.    
     
  Premium paid by incoming lessee. That part of the premium that is treated as expenditure by the lessee as expenditure on the provision of the fixture.
     
  Severance of fixture. Market value of the fixture when it is severed.
     
  Assignment of rights by equipment lessor. Consideration given by the assignee for the assignment.
     
  Discharge of equipment lessee’s obligations for a capital sum. That capital sum.
     
  Permanent discontinuance of the qualifying activity followed by the sale of the qualifying interest. The part of the sale price on which the buyer can claim PMAs as expenditure on the provision of the fixture.
If the buyer cannot claim PMAs, the sale price of the fixture is that part of the sale price on which the buyer would be able to claim PMAs if a claim were possible.    
     
  Permanent discontinuance of the qualifying activity followed by the demolition or destruction of the fixture. The net amount received for the remains of the fixture plus:
  • any insurance money received in respect of the demolition or destruction, and
  • any other capital compensation.    
         
      Permanent discontinuance of the qualifying activity followed by permanent loss of the fixture not by demolition or destruction. Any insurance money received in respect of the loss and any other capital compensation.
         
      Beginning of use of the fixture wholly or partly for purposes other than those of the qualifying activity. Market value when the use begins.**

**Market value of a fixture is that part of the price paid for the qualifying interest,which, if the qualifying interest had been sold in the open market immediately before the event, would have been treated as expenditure by the buyer on the provision of the fixture.