What does section 212R of the Capital Allowances Act 2001 require?

Section 212R requires that when relevant plant and machinery is disposed of, any disposal proceeds or amounts brought into account must be apportioned between the new pool and the relevant pool. The apportionment must be carried out on a just and reasonable basis under United Kingdom law.

How are disposal proceeds split between the new pool and the relevant pool?

Disposal proceeds must be divided between the new pool and the relevant pool on a just and reasonable basis. Because relevant plant and machinery may have expenditure allocated across both pools, the business must fairly reflect the extent to which each pool relates to the asset disposed of.

Does section 212R prescribe a specific formula for apportioning disposal proceeds?

No. Section 212R does not prescribe a specific formula or method. It relies on the general principle of just and reasonable apportionment, giving businesses flexibility but requiring them to justify the basis used if challenged by HMRC under United Kingdom tax law.

Can you give an example of how disposal proceeds are apportioned under section 212R?

If a company allocated £60,000 of a £100,000 asset to the new pool and £40,000 to the relevant pool, and later sold the asset for £50,000, it could apportion proceeds in the same 60:40 ratio — crediting £30,000 to the new pool and £20,000 to the relevant pool.

Capital Allowances Act 2001 section 212R

Apportionment of proceeds of disposal of relevant plant and machinery

Section 212R requires that when relevant plant and machinery is disposed of, the disposal proceeds must be split fairly between the new pool and the relevant pool.

When relevant plant and machinery is subject to a disposal event, the proceeds must be apportioned between pools
The apportionment is between the new pool and the relevant pool associated with that plant and machinery
The basis of apportionment must be just and reasonable
This applies to any amount that needs to be brought into account in connection with the disposal

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member