Capital Allowances Act 2001 section 426

Pre-trading expenditure

Section 426 explains when a person is entitled to a balancing allowance in respect of certain pre-trading expenditure on mineral exploration and access, or on plant or machinery used for mineral exploration.

• A balancing allowance arises where qualifying pre-trading exploration expenditure was incurred but exploration permanently ceased before trading began
• A balancing allowance also arises where qualifying pre-trading expenditure was incurred on plant or machinery used for mineral exploration and access
• The balancing allowance is given in the chargeable period in which the first day of trading falls
• This ensures that expenditure incurred before a trade commences is not left without tax relief where activities ceased prior to trading