Capital Allowances Act 2001 section 416

Non-ring fence trades: expenditure on restoration within 3 years of ceasing to trade

Section 416 provides for capital allowances on site restoration expenditure incurred after a non-ring fence mineral extraction trade has ceased, provided the spending occurs within three years of the last day of trading.

• Where a person ceases a non-ring fence mineral extraction trade and spends money restoring a relevant site within three years of the last trading day, the net cost of that restoration qualifies for capital allowances, treated as incurred on the last day of trading.
• The expenditure must not have already been deducted in computing trading profits for tax, and it must be of a type that would have been either a deductible trading expense or qualifying capital expenditure had it been incurred while the trade was still running.
• Restoration includes landscaping and works required under planning permission (or equivalent overseas conditions), but it does not include the decommissioning of plant or machinery.
• The net cost is the gross restoration expenditure less any amounts received within three years of the last trading day that are attributable to the restoration, such as proceeds from spoil, removed assets, or tipping rights; where the allowance applies, neither the gross expenditure nor the amounts subtracted are brought into account as income or deductions for any other tax purpose.