What is a mineral asset under section 397 of the Capital Allowances Act 2001?

Under section 397, a mineral asset means any mineral deposits, or any land containing mineral deposits, together with any interest in or right over such deposits or land. This broad definition covers direct ownership of minerals as well as lesser interests such as mining leases or extraction licences, and determines eligibility for mineral extraction allowances under Part 10.

Does a mining lease or licence to extract minerals qualify as a mineral asset?

Yes. Section 397 defines a mineral asset to include any interest in, or right over, mineral deposits or land containing them. This means mining leases, licences to extract, and other contractual rights all qualify as mineral assets. The holder of such rights may therefore be eligible to claim mineral extraction allowances under Part 10 of the Capital Allowances Act 2001.

Why is the definition of mineral asset important for capital allowances?

The definition of mineral asset in section 397 underpins the entire mineral extraction allowances regime in Part 10 of the Capital Allowances Act 2001. It determines which types of asset qualify for tax relief. Whether a person owns mineral-bearing land outright or holds a lesser right such as an extraction licence, the definition establishes their eligibility for allowances.

Can owning land containing mineral deposits make you eligible for mineral extraction allowances?

Yes. Under section 397, any mineral deposits or any land containing mineral deposits constitutes a mineral asset. If a business purchases land known to contain minerals such as limestone, sand, or gravel, that land and its deposits qualify as a mineral asset, potentially making the business eligible for mineral extraction allowances under Part 10.

Capital Allowances Act 2001 section 397

Meaning of "mineral asset"

Section 397 defines the term "mineral asset" as used throughout Part 10 of the Capital Allowances Act 2001, which deals with mineral extraction allowances.

A mineral asset includes any mineral deposits, whether standalone or as part of a parcel of land containing those deposits.
A mineral asset also includes any interest in, or right over, such mineral deposits or the land comprising them.
This definition is broad enough to cover both direct ownership of minerals and lesser interests such as mining rights or licences.
The definition underpins the entire mineral extraction allowances regime and determines what types of asset qualify for relief under Part 10.

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