Capital Allowances Act 2001 section 218

Restriction on B's qualifying expenditure: section 214 or 216

Section 218 restricts the buyer's (B's) qualifying expenditure for capital allowances purposes where the transaction falls within the connected persons or sale and leaseback anti-avoidance rules.

• Where this section applies, any excess of B's expenditure over a capped amount (D) is disregarded when calculating B's available qualifying expenditure for capital allowances
• If the seller (S) must bring a disposal value into account because of the transaction, D equals that disposal value; if S had no qualifying expenditure on the asset (and nor did a linked person), D is nil
• Otherwise, D is the smallest of the market value of the plant or machinery, the capital expenditure incurred by S on providing it, or the capital expenditure incurred by a person connected with S on providing it
• This restriction does not apply to sale and finance leaseback transactions, which are dealt with separately under sections 223 to 225