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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Capital allowances: allowances which have been or may be made

It is not enough to take account of allowances which HAVE been given. Section 41 provides that expenditure is to be excluded to the extent to which any capital allowance or renewals allowance



  • has been made in respect of it, or
  • MAY be made in respect of it.

What this means in practice is that





  • where the capital allowances code provides for a balancing charge, and
  • the allowable capital gains expenditure is the actual expenditure qualifying for capital allowances,

the restriction is the net allowances that have been given in respect of the part being disposed of. In all other cases you must take account of any allowances which have been or may be given in respect of the asset to the extent that those allowances have not already been used to restrict a loss.