Capital Allowances Act 2001 section 535

Insurance or compensation money

Section 535 provides an exception to the general rule that expenditure met by contributions from others is excluded from capital allowances, where that expenditure is funded by insurance or compensation money relating to an asset that has been destroyed, demolished, or put out of use.

• Expenditure funded by insurance money or other compensation money can still qualify for capital allowances
• This overrides the general rule in section 532(1) which normally excludes expenditure met by contributions from other persons
• The insurance or compensation must relate to an asset that has been destroyed, demolished, or put out of use
• The funding may be direct or indirect — either way, the expenditure is still treated as having been incurred by the person