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Expenditure qualifying for capital allowances

The provisions for wasting of expenditure (see C2.1210) do not apply to leases of assets used solely for the purposes of a trade, profession or vocation, for which capital allowances have been or could have been claimed, or to expenditure which has otherwise qualified in full for any capital allowance. Where a lease has not qualified for full capital allowances, expenditure and consideration received for disposal are apportioned, the separate parts being dealt with under the rules for wasting assets and the rules for assets which have qualified in full for capital allowances, respectively. Any apportionment of expenditure or consideration made for capital allowance purposes is followed for these purposes¹.

Example 1

DC Ltd purchased a lease of land for £50,000 in May 2017 when it had an unexpired term of 40 years. Expenditure of £100,000 was incurred in December 2022 on the construction of a new factory on the site for use in the trade of DC