Capital Allowances Act 2001 section 38ZA

Vehicles for which deductions allowed at fixed rate under Part 2 of ITTOIA 2005

Section 38ZA prevents vehicle expenditure from qualifying for capital allowances where a fixed-rate mileage deduction has already been claimed for the same period under the income tax rules.

• Vehicle expenditure cannot be treated as qualifying expenditure for capital allowances if a fixed-rate deduction has been claimed for the same period under section 94D of ITTOIA 2005
• The fixed-rate deduction is the simplified mileage allowance available to certain businesses for vehicle running costs
• This rule prevents a double tax benefit by ensuring taxpayers cannot claim both a mileage-rate deduction and capital allowances on the same vehicle
• The restriction applies on a period-by-period basis, so it is the claiming of the fixed-rate deduction in a given period that blocks capital allowances for that period