Corporation Tax Act 2009 section 148

Allocation of ancillary capital expenditure

Section 148 sets out how ancillary capital expenditure on a cemetery or memorial garden trade is allocated to a particular accounting period for the purpose of calculating the allowable deduction.

• Ancillary capital expenditure is allocated to a period using a formula based on the proportion of grave-spaces or memorial garden plots sold in that period relative to the total remaining and sold plots.
• The starting point for the formula is "residual expenditure", which is the cumulative ancillary capital expenditure incurred to date, reduced by certain amounts including prior period deductions, proceeds from disposed-of assets, and expenditure on structures destroyed before trading began.
• A special historical adjustment applies to expenditure incurred before the basis period for the 1954–55 tax year, which reduces the residual expenditure by a fraction reflecting plots already sold before that date.
• Definitions of key terms — including "compensation", "the first sale period", and "remaining old expenditure" — ensure the calculation accounts for insurance proceeds, the commencement of the cemetery trade, and pre-1954–55 spending respectively.