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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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MEA: Second-hand assets: expenditure on mineral asset: previous trader

Where a person carrying on a trade of mineral extraction acquires an asset, and part of the value is attributable to expenditure on exploration and access incurred prior to his acquisition, CAA01/S407 and CAA01/S411 provide:

  • the measure of expenditure to be relieved at the writing down allowance rate of 25% a year,
  • with the balance relieved at 10% per year.


The expenditure, which is treated as attracting the 25% rate, is the smaller of:

  • the amount of the buyer’s expenditure corresponding to the part of the value of the asset attributable to the previous trader’s expenditure on mineral exploration and access,



  • the previous trader’s expenditure on mineral exploration and access attributable to the asset acquired by the buyer.


The balance of the purchaser’s qualifying expenditure qualifies at the 10% writing down allowance rate.