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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Groups: group relief: meaning of excess capital allowances

CTA10/S99(1)(b), CTA10/S101

Some excess capital allowances can be surrendered and claimed as group relief (CTM80105).  The capital allowances concerned are those derived from the qualifying activity of special leasing; allowances which fall to be given under CAA01/S260 (see CA20040 and CA29450). These are the excess of special leasing allowances over the income of qualifying special leasing activities.

That income above is the income before deduction of:

  • any losses of any other period, or
  • any capital allowances.

CTA10/S101(3) and (4) deal with special leasing allowances that are brought forward:

  • the amount to be surrendered is limited to the allowances for the current period, without regard to any allowances brought forward, and
  • in calculating the excess of allowances, over the leasing income of the current period, the amount of the income is not reduced by allowances brought forward.
  • Excess capital allowances may be surrendered even if the surrendering company has profits against which those allowances could be set – CTA10/S99(2)-(3).

Whether an activity comprises special leasing is a matter of fact but in cases of doubt or difficultly the case should be submitted to a CT Technical Specialist.