Capital Allowances Act 2001 section 59

Unrelieved qualifying expenditure

Section 59 explains how unrelieved qualifying expenditure arises in a capital allowances pool and the rules for carrying it forward to future periods, including restrictions that apply when a business switches to the cash basis of accounting.

• Unrelieved qualifying expenditure arises when available qualifying expenditure (AQE) exceeds total disposal receipts (TDR) for a period, and is carried forward as the excess less any writing-down allowance claimed — or the full excess if no allowance is claimed
• No unrelieved qualifying expenditure may be carried forward from the final chargeable period (i.e. when the qualifying activity permanently ceases)
• When a person switches to the cash basis, any amount that would be deductible under cash basis rules cannot be carried forward as unrelieved qualifying expenditure from the previous period's pool
• Where unrelieved qualifying expenditure relates to a vehicle and a cash basis deduction is claimed for that vehicle in the following tax year, none of the vehicle-related unrelieved qualifying expenditure may be carried forward