Capital Allowances Act 2001 section 454

Qualifying expenditure

Section 454 defines what counts as qualifying expenditure for know-how allowances and sets out the four circumstances in which capital spending on acquiring know-how can qualify.

• Capital expenditure on know-how acquired for use in a trade the person is already carrying on, or in a trade they subsequently set up, qualifies for know-how allowances.
• Know-how acquired together with a trade (or part of a trade) can also qualify, provided the parties jointly elect for the payment to be treated as consideration for know-how rather than goodwill, or the trade was previously carried on wholly outside the United Kingdom.
• The same expenditure cannot be treated as qualifying expenditure in relation to more than one trade, preventing a double claim for allowances.
• Where qualifying expenditure is incurred before the relevant trade starts, it is treated as incurred on the date the trade is set up and commenced.