Capital Allowances Act 2001 section 66B

SME company entering NI corporation tax regime

Section 66B deals with how capital allowance pools are handled when a small or medium-sized enterprise (SME) that is a Northern Ireland employer first enters the Northern Ireland corporation tax regime.

• When an SME company becomes a Northern Ireland employer company for the first time in a chargeable period after the commencement day, special transitional rules apply to its existing capital allowance pools.
• Assets that continue to be used in the same trade are not treated as having been disposed of simply because they are reclassified from a main rate activity to a Northern Ireland rate activity — so no balancing charges or other disposal consequences arise.
• If the company's only qualifying activity in the relevant period is a Northern Ireland rate activity, all unrelieved qualifying expenditure carried forward in main pools and special rate pools is simply treated as relating to plant and machinery used for the Northern Ireland rate activity.
• If the company carries on both a Northern Ireland rate activity and a main rate activity, the unrelieved qualifying expenditure in each main pool and each special rate pool must be split on a just and reasonable basis into a Northern Ireland rate pool and a main rate pool.