Capital Allowances Act 2001 section 101

Giving effect to allowances and charges

Section 101 of Schedule 3 sets out how writing-down allowances, balancing allowances, and balancing charges on qualifying expenditure are given effect, depending on whether or not the trade use condition is met.

• Where the trade use condition is met, allowances are treated as trade expenses and balancing charges as trade receipts in calculating trading profits.
• Where the trade use condition is not met, the allowances and charges are instead dealt with under the rules for qualifying non-trade expenditure in Sections 479 and 480.
• The distinction between trade and non-trade treatment determines how the allowance or charge feeds into the person's tax computation.
• For the purposes of Part 8, a person's "income from patents" is defined to include any balancing charges arising on qualifying expenditure.