Capital Allowances Act 2001 section 262AA

Co-ownership schemes: carrying on qualifying activity

Section 262AA establishes how capital allowances work when participants in a co-ownership authorised contractual scheme collectively carry on a qualifying activity, by treating each participant as individually carrying on that activity.

• Where participants in a co-ownership authorised contractual scheme together carry on a qualifying activity, each participant is treated as carrying on that activity in their own right for capital allowances purposes.
• This treatment only applies to a participant to the extent that their share of the profits or gains from the activity are, or would be if there were any, chargeable to tax.
• When determining whether the participants together carry on a qualifying activity in the first place, it is assumed that all participants' profits or gains are chargeable to tax, regardless of whether they actually are.
• The effect is that tax-exempt participants (such as certain pension funds) do not receive capital allowances, but their presence in the scheme does not prevent tax-paying participants from qualifying.