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HMRC internal manual

Capital Allowances Manual

MEA: Allowances and charges: How allowances are given

Allowances and charges are made to or on any person under the MEA code in taxing his trade of mineral extraction.

Allowances are given first for the chargeable period related to the incurring of the expenditure - as defined in CAA01/S6 (1).

There is no provision for pooling - allowances are given on individual items of expenditure.  Balancing adjustments can therefore arise in a continuing trade. However in practice no objection should be raised if assets are grouped together for computational convenience, provided that:

  • individual sources are dealt with separately,



  • expenditure written down at 10% per annum is distinguished from other expenditure.


In exceptional circumstances it may be necessary to reconstruct separate computations for individual items where a disposal receipt arises or a balancing allowance is due.

Allowances are given by reference to the balance of qualifying expenditure not yet allowed less any disposal receipts required to be brought into account. Normally writing down allowance of 10% or 25% is due.  For qualifying expenditure on the acquisition of a mineral asset, the writing down allowance is 10% (CAA01/S418 (1)(a)). For other qualifying expenditure, the writing down allowance is 25% (CAA01/S418 (1)(b)).