Capital Allowances Act 2001 section 428

Ceasing to work mineral deposits

Section 428 sets out the circumstances in which a person who permanently ceases to work particular mineral deposits becomes entitled to a balancing allowance for the related qualifying expenditure.

• A balancing allowance arises when a person permanently ceases to work particular mineral deposits in a chargeable period, provided the qualifying expenditure relates solely to exploration, access or acquisition of those deposits.
• Where two or more mineral assets were originally part of, or derived from, a single mineral asset, the balancing allowance is not available until the person permanently ceases to work all the deposits comprised in every one of those related mineral assets taken together.
• If a mineral asset relates to mineral deposits without actually consisting of them, the deposits are treated as comprised in that asset for the purposes of the grouped cessation rule.
• The effect is to prevent a premature balancing allowance claim where a person stops working only some deposits but continues to exploit others that share a common origin.