»Ê¹ÚÌåÓýapp

CAA01/S532 & S533

You may have a case where a person who incurs expenditure that qualifies for capital allowances receives a contribution towards that expenditure. If so, the general rule is that the contribution is deducted from the expenditure and the person gets capital allowances on the net amount. »Ê¹ÚÌåÓýappre are exceptions to this general rule CA14200.

For this general rule it does not matter if the contribution is:

• made by a public body or another person (a public body is the Crown or any government or public or local authority wherever it is based)
• capital or revenue - unless the allowances are dredging allowances (a contribution towards a person’s expenditure on dredging is deducted if it is made by a public body or if it is a capital contribution made by another person)
• not received until after the expenditure is incurred (if the expenditure was to be met in whole or part by the contribution then it is still deducted)

Treat a non-returnable grant of money given by way of gift, that is, not in return for anything, as a contribution if there is a clear connection between the receipt of the grant and the incurring of the expenditure. »Ê¹ÚÌåÓýapp grant should be specifically related to the capital expenditure on the provision of capital assets.

»Ê¹ÚÌåÓýapp fact that taxpayer applies for and receives a grant after expenditure on assets on which capital allowances are claimed has been incurred and paid for does not prevent the grant being deducted as a contribution (Cyril Lord Carpets Limited v Schofield 42TC637). You should also apply the contributions legislation to a subsidy or contribution towards expenditure that a person becomes entitled to after expenditure has been incurred. Do not treat a loan as a contribution.

European Union (EU) Grants are deducted from expenditure that qualifies for capital allowances.