HMRC internal manual

Capital Allowances Manual

PMA: Fixtures: Election to fix apportionment

CAA01/S198 - S200

Where an interest in land that includes a fixture is sold and the seller is required to bring a disposal value into account as a result of claiming allowances or pooling expenditure, there is legislation that lets the parties to the sale fix the amount attributable to the fixture by making a joint election. The election fixes the seller’s disposal value and the purchaser’s qualifying expenditure (CA26400).

An election can be made under CAA01/S198 in either of the following circumstances:

  • there is a sale of the qualifying interest at or above market value
  • an incoming lessee has paid a premium (at or above market value) for an interest in land that includes a fixture

An election can be made under CAA01/S199 where both of the following conditions apply:

  • an incoming lessee has paid a premium for an interest in land that includes a fixture
  • the lessee and lessor make a joint election under S183 for the lessee to be treated as owner of the fixture.

The amount apportioned to a fixture may not exceed:

  • the amount that the seller was able to claim allowances on in respect of the fixture
  • the sale price of the fixture or the premium paid for it. 

The remainder, if any, of the sale price or premium is attributed to the other property included in the sale. It should be apportioned between the other property where necessary.

Guidance about the election procedure is in CA26850.

An election will not have any effect on the disposal value of the fixture if CAA01/S197 (disposal values in avoidance cases) CA26750 applies.

If there is evidence that elections are being mis-used to avoid tax you should send a brief report of the facts and the suspected abuse to BAI (Capital Allowances Team - Technical).