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HMRC internal manual

Capital Allowances Manual

MEA: Second-hand assets: restriction of relief

CAA01/S411 contains the rules for computing the buyer’s qualifying expenditure where the conditions in CAA01/S407 are satisfied. Expenditure on land is first restricted by CAA01/S404.

If, under the MEA code, no allowance was made to, or balancing charge made on, the previous trader then the buyer’s qualifying expenditure is the lesser of:

  • his own expenditure,
  • or the previous trader’s qualifying expenditure.


If however the previous trader did become entitled to an allowance or liable to a balancing charge in respect of his qualifying expenditure then the buyer’s expenditure is the lesser of:

  • his actual expenditure,



  • the residue of the previous trader’s qualifying expenditure (CAA01/S411 (3)).


The residue is defined in CAA01/S411 (4) as:

  • the previous trader’s qualifying expenditure,



  • the total of all MEA made to him in respect of that expenditure, plus
  • the amount of any MEA code balancing charge made in respect of that expenditure.