Capital Allowances Act 2001 Schedule A1 Part 3

Clawback of first-year tax credit

Schedule A1 Part 3 deals with the circumstances in which a first-year tax credit that has been claimed must be repaid (clawed back), and how the clawback amount is calculated.

• Where a company has claimed a first-year tax credit but subsequently disposes of the asset or ceases to use it for qualifying purposes, the credit may need to be repaid.
• The clawback provisions ensure that companies cannot obtain the benefit of a first-year tax credit and then quickly dispose of the asset or redirect it to non-qualifying use.
• The amount to be clawed back is calculated by reference to the original first-year tax credit claimed, adjusted to reflect the disposal value or change in use of the asset.
• These provisions were introduced by Finance Act 2019, section 33(1)(c), to safeguard the integrity of the first-year tax credit regime.

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