Capital Allowances Act 2001 section 424

Disposal value restricted in case of interest in land

Section 424 restricts the disposal value that must be brought into account for mineral extraction allowances where the asset disposed of is an interest in land, by excluding the undeveloped market value of that interest.

• When an interest in land is disposed of, the disposal value is reduced by stripping out the undeveloped market value of the land — mirroring the exclusion applied when the land was originally acquired
• The undeveloped market value is the open market price the interest would fetch assuming no mineral deposits exist on or in the land and only existing permitted development could ever lawfully take place
• Development counts as existing permitted development if, at the time of disposal, it has already been lawfully carried out (or begun) or could be lawfully carried out under a general development order
• For land outside the United Kingdom, lawfulness of past development is judged under local law, but the general development order test is applied as if the land were in England