Capital Allowances Act 2001 section 423

Sections 421 and 422: amount of disposal value to be brought into account

Section 423 sets out how to determine the disposal value that must be brought into account for mineral extraction allowances when an asset is sold, lost, destroyed or otherwise disposed of.

• For a normal sale, the disposal value is the net sale proceeds plus any related insurance money and capital compensation; but where the sale is below market value and certain conditions are met, market value is used instead.
• For demolition or destruction, the disposal value is the net amount received for the remains plus any insurance and capital compensation; for permanent loss without demolition, it is any insurance and capital compensation received.
• If the trade permanently ceases and one of the above events then occurs, the disposal value is determined by reference to whichever event applies; for any other event not covered, market value at the time of the event is used.
• The market value override on a below-market-value sale applies where the buyer's expenditure cannot qualify for plant and machinery or research and development allowances, or the buyer is a dual resident investing company connected with the seller.