Capital Allowances Act 2001 section 48

Expenditure of small or medium-sized enterprises: businesses

Section 48 explains how to determine whether expenditure incurred by a business that is not a company (such as a sole trader, partnership of individuals, or certain other bodies) qualifies as expenditure of a small or medium-sized enterprise for the purposes of the first-year allowances rules.

• This section applies to businesses that are not companies — sole traders, partnerships of individuals, registered friendly societies, and certain non-company bodies within the charge to corporation tax
• To test whether a business qualifies as small or medium-sized, you imagine it is a hypothetical company and then apply the standard companies legislation size tests to that hypothetical company
• The hypothetical company is assumed to carry on all the trades and activities of the business, with its financial years matching the business's chargeable periods and accounts drawn up accordingly
• If the hypothetical company would qualify as small or medium-sized under the relevant Companies Act provisions for the financial year in which the expenditure is incurred, the business is treated as a small or medium-sized enterprise for first-year allowance purposes