Capital Allowances Act 2001 section 265

Successions: general

Section 265 sets out the capital allowances treatment when one person succeeds to a qualifying activity previously carried on by another, ensuring that plant and machinery transfers on succession are deemed to take place at market value.

• When a successor takes over a qualifying activity from a predecessor, any plant and machinery that passes across without being sold is treated as having been sold at market value.
• For income tax purposes, the section applies only where no person who was carrying on the trade or property business before the succession continues to carry it on afterwards; for corporation tax, the condition is that no company in a partnership carrying on the activity continues in that partnership after the succession.
• The property must have been owned by the predecessor and in use (or available for use) for the old activity immediately before succession, and must continue in use (or be available for use) for the new activity immediately afterwards, without an actual sale having taken place.
• No annual investment allowance or first-year allowance can be claimed by the successor on plant and machinery acquired through this deemed market value transaction.