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HMRC internal manual

Oil Taxation Manual

Decommissioning and abandonment: general decommissioning expenditure: relief for expenditure incurred before cessation of ring fence trade and on or after 12 March 2008


A special allowance for general decommissioning expenditure was introduced in FA08 for certain expenditure incurred on or after 12 March 2008 where a ring fence trade is being carried on. The expenditure must qualify as general decommissioning expenditure (see OT28040) and the plant or machinery concerned must have been brought into use for the purpose of the ring fence trade.

The special allowance is claimed by election to an Officer of HM Revenue and Customs no later than two years after the end of the chargeable period related to the expenditure. The election is irrevocable and must specify the amount of the general decommissioning expenditure to which it relates.

If the machinery or plant is or has been demolished any monies received for its remains are to be deducted from the amount qualifying for relief.

The amount of the special allowance for the chargeable period is equal to the amount of qualifying general decommissioning expenditure covered by the election as is incurred in the period. This is equivalent to, and is often called, a 100% allowance.

For expenditure incurred on or after 22 April 2009 the conditions for relief were amended (see OT28085).

If an election is not made, the expenditure may still qualify for relief under CAA2001\S161C (see OT28300) for reuse etc. and CAA2001\S26 for demolition costs.

Before 12 March 2008 a more limited relief was available for abandonment expenditure (see OT28100).