What allowance is available under section 441 of the Capital Allowances Act 2001 for mineral extraction expenditure?

Section 441 provides a 100% allowance on qualifying mineral extraction expenditure. The full amount of expenditure is written off in the relevant chargeable period. However, if a disposal value must be brought into account in the same period, the allowance is reduced to the excess of expenditure over that disposal value.

When is the mineral extraction allowance under section 441 given?

The allowance is given in the chargeable period in which the qualifying expenditure is incurred. If the expenditure is incurred before the trade is set up and commenced, the allowance is deferred to the chargeable period in which trading begins. Pre-trading expenditure is preserved, not lost, under this rule.

Can a person claim less than the full allowance under section 441?

Yes. A person claiming an allowance under section 441 may request that it be reduced to a specified lower amount. This provides flexibility in managing the timing of tax relief, allowing claimants to preserve part of the allowance for a future period when it may be more beneficial.

How does a disposal value affect the mineral extraction allowance under section 441?

If a disposal value is brought into account in the same chargeable period as the qualifying expenditure, the allowance is reduced to the excess of expenditure over the disposal value. For example, £500,000 expenditure with a £150,000 disposal value yields a £350,000 allowance. If the disposal value equals or exceeds the expenditure, no allowance arises.

Capital Allowances Act 2001 section 441

Allowances

Section 441 sets out how allowances are calculated and claimed when a person incurs qualifying expenditure on mineral extraction.

A person who incurs qualifying expenditure receives a 100% allowance, reduced by any disposal value that must be brought into account in the same period
The allowance is given in the chargeable period when the expenditure is incurred, or, if earlier, in the period when the relevant trade starts
Where a disposal value applies, the allowance is limited to the excess of the qualifying expenditure over that disposal value — if the disposal value equals or exceeds the expenditure, no allowance arises
A person making a claim may choose to reduce the allowance to a specified lower amount, providing flexibility over the timing of tax relief

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member