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HMRC internal manual

Capital Allowances Manual

Dredging: Contributions and subsidies

CAA01/S533 and CAA01/S543

The normal rules about contributions and subsidies do not apply to dredging. Instead, the following rules apply.

A person who makes a capital contribution towards dredging expenditure incurred by another person is treated as if the contribution had been capital expenditure on that dredging. This means that the person who makes the contribution can claim dredging allowances.

A person cannot claim dredging allowances on capital expenditure incurred on dredging to the extent that the expenditure is met, or is to be met, directly or indirectly by:

  • the Crown,
  • a government or public or local authority, (in the United Kingdom or elsewhere), or
  • capital sums contributed by any other person for purposes other than those of the recipient’s trade.


You should deduct the contribution received from the expenditure to get the amount on which you give dredging allowances.

The normal rules about subsidies and contributions let you deduct a revenue contribution, that is a contribution that can be deducted in computing the contributor’s profits. The contribution rules for dredging do not contain anything like that. A contribution must be a capital contribution before you can deduct it.