Capital Allowances Act 2001 section 262AC

Co-ownership schemes: calculation of allowance after election

Section 262AC sets out how the operator of a co-ownership authorised contractual scheme must calculate and allocate plant and machinery allowances to participants once an election under section 262AB is in effect.

• The operator calculates allowances at scheme level by treating the scheme as if it were a single person carrying on the qualifying activity, but the scheme itself cannot claim first-year allowances or the annual investment allowance
• When the election first takes effect, existing scheme property is treated as acquired by the scheme at its tax written-down value, so no balancing allowance or balancing charge arises on the deemed transfer
• The operator must allocate allowances to each participant on a just and reasonable basis, having particular regard to the relative size of each participant's unit-holding but ignoring each participant's individual tax position
• Where participants carry on more than one qualifying activity through the scheme, the calculation and allocation must be performed separately for each activity