Capital allowances: computational changes
TCGA92/S41, S45 & S47
Where the expenditure on an asset has qualified for capital allowances or renewals allowance, there are two circumstances in which the normal rules for computing the chargeable gain on a disposal of that asset may change. They are:
- if the asset is disposed of at a loss (TCGA92/S41), see CG15410 onwards,
- if the asset is a wasting asset (TCGA92/S45 and TCGA92/S47), see CG15440 onwards.
For all other disposals the computation is unaffected by the fact that capital allowances have been given. In particular:
- the capital gains allowable expenditure is not restricted simply because capital allowances or renewals allowances have been given, section 41(1),
- nor is the capital gains disposal consideration reduced because there is, as a result of the disposal,
- a capital allowances balancing charge, or
- an adjustment under CAA01/S55 (plant and machinery),
TCGA92/S44 & TCGA92/SCH3/PARA7 – Plant and machinery
If the assets which qualify for capital allowances are plant and machinery, there are further provisions which need to be taken into account:
- under TCGA92/S44(1)(c), plant and machinery must be treated as a wasting asset (see CG15435),
- TCGA92/SCH3/PARA7 will exclude the plant and machinery from a rebasing election made under TCGA92/S35(5) (see CG16780).