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The cluster area allowance is set out in CTA 2010, ss 356JC–356JNB. It operates in a broadly similar manner to investment allowance in that eligible expenditure (ie capital expenditure or such other amount that may be specified in regulations¹) in relation to a 'cluster area' generates an allowance equal to 62.5% of the expenditure, and the allowance is set off against the supplementary charge profits of the company once activated. The operating and leasing expenditure prescribed as investment expenditure for the purposes of the investment allowance in 2017 is also treated as investment expenditure for the purposes of the cluster allowance². The key difference between cluster area allowance and investment allowance is that the former allowance is activated by income from the cluster area, as opposed to the field.

Where a company is entitled to allowances under these provisions, the onshore allowance (D7.924) and the investment allowance (D7.924A) it may choose the order in which the relieving provisions are to be applied³.