HMRC internal manual

Capital Allowances Manual

MEA: Second-hand assets: formerly owned by traders

Where a mineral extraction trader has previously owned an asset the allowances to a later holder of the asset are restricted by reference to the cost to the previous trader.

The provisions of CAA01/S407 and CAA01/S411 apply to all assets inside or outside of the UK. However the secondhand cost restrictions of Section 411 only apply to the acquisition by a person claiming allowances under the MEA code, if the asset has previously been held by a mineral extraction trader within the UK tax net.

The provisions in Sections 407 and 411 apply where:

  • a person (the buyer) carrying on a trade of mineral extraction,
  • acquires an asset from another person, and
  • either that person, or an earlier owner of the asset, incurred expenditure on it in connection with a trade of mineral extraction carried on by him.


In any sequence of traders and non-traders the buyer’s qualifying expenditure is restricted by reference to the qualifying expenditure of the most recent previous trader. However, that qualifying expenditure may in turn have been restricted by reference to the qualifying expenditure of an earlier trader in the sequence.

Note that no restriction of relief is made where the purchased asset is a mineral asset situated in the UK and the capital expenditure incurred by the buyer consists of sums paid under a contract entered into by him before 16 July 1985.