Capital Allowances Act 2001 section 51L

Special provision for short chargeable periods

Section 51L deals with how the annual investment allowance (AIA) restrictions apply when a company or qualifying activity has more than one short chargeable period ending within the same financial year or tax year.

• The section applies where multiple chargeable periods of a company fall within one financial year, or multiple chargeable periods for a qualifying activity fall within one tax year
• Each chargeable period is assessed independently — as if it were the only one ending in that year — when determining whether the AIA sharing restrictions for groups and commonly controlled businesses apply
• AIA qualifying expenditure incurred in a chargeable period where a particular sharing restriction does not apply is ignored for the purposes of that restriction
• This prevents the existence of short chargeable periods from distorting the application of the AIA restrictions that require the allowance to be shared between related companies or activities