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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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IBA: Qualifying trade: Meaning thereof

CAA01/S274

A qualifying trade is:

  • a trade of the type listed in table A, or
  • an undertaking carried on by way of trade listed in table B.
Table A (qualifying trades) Definition
   
Manufacturing or processing Manufacturing or processing is manufacturing goods or materials CA32210, or subjecting goods or materials to a process CA32213
Storage Storage is a trade consisting in storing goods or materials:
1. which are to be used in the manufacture of other goods or materials, or
2. which are to be subjected to a process in the course of a trade,
3. which, having been manufactured or produced or subjected to a process in the course of a trade, have not yet been delivered to any purchaser, or
4. on their arrival in the UK from a place outside the UK [CA32224](https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca32224). | | Agricultural contracting    | Agricultural contracting [CA32225 ](https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca32225)is a trade consisting in:

1. ploughing or cultivating land occupied by another person, or
2. carrying out any other agricultural operation on land occupied by another person, or
3. threshing the crops of another person.                                                                                                                                                                           | | Foreign plantation          | A foreign plantation is a trade consisting in working land outside the UK for the purposes of husbandry, forestry or the growing or harvesting of crops [CA32226](https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca32226).                                                                                                                                                                                                                                                                                    | | Fishing                     | Fishing is a trade consisting in catching or taking fish or shellfish [CA32227](https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca32227).                                                                                                                                                                                                                                                                                                                                                                      | | Mineral extraction          | Mineral extraction is a trade consisting in working a source of mineral deposits [CA32228](https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca32228).                                                                                                                                                                                                                                                                                                                                                           |

 

Table B (undertakings which are qualifying trades) Definition
   
Electricity undertaking An electricity undertaking is an undertaking for the generation, transformation, conversion, transmission or distribution of electrical energy.
Water undertaking  
  A water undertaking is an undertaking for the supply of water for public consumption.
Sewerage undertaking A sewerage undertaking is an undertaking for the provision of sewerage services within the meaning of the Water Industries Act 1991
Transport undertaking CA32230
Inland navigation undertaking  
Dock undertaking A dock includes:
* any harbour, and
* any wharf, pier, jetty or other works in or at which vessels can unship merchandise or passengers,
other than a pier or jetty primarily used for recreation CA32232.    
  Tunnel undertaking  
  Bridge undertaking Construction expenditure does not qualify under this heading unless it was incurred after the end of 1956-57
  Highway undertaking  
  Hydraulic power undertaking A hydraulic power undertaking is an undertaking for the supply of hydraulic power.

Professions and vocations are not trades and so they cannot be qualifying trades.

A trade does not need to be within the charge to tax to be a qualifying trade. For example, a charity may rent a building in which it makes goods to sell in its shops. The charity is exempt from tax but the manufacture of goods is still a qualifying trade and so the landlord of the building can claim IBA.