Capital Allowances Act 2001 section 45L

Exclusion of plant or machinery partly for use outside designated assisted areas

Section 45L prevents the enhanced first-year allowance for designated assisted areas from being claimed where plant or machinery is intended partly for use outside those areas and the arrangements are motivated by obtaining a tax advantage.

• Expenditure on plant or machinery does not qualify for the designated assisted area first-year allowance if, when the spending is incurred, the company intends the asset to be used partly in a non-designated area
• The disqualification only applies where a main purpose of the arrangements is to obtain a first-year allowance (or a larger one) in respect of the portion of expenditure relating to that intended non-designated area use
• The portion of expenditure attributable to intended use in a non-designated area must be calculated on a just and reasonable basis
• Relevant arrangements include both the transaction giving rise to the expenditure and any wider scheme or arrangements of which that transaction forms part