Corporation Tax Act 2009 section 815

Election to exclude capital expenditure on software

Section 815 allows a company to elect to take capital expenditure on computer software outside the intangible fixed assets regime, so that it can instead be relieved through capital allowances.

• A company may elect to remove capital expenditure on computer software from the intangible fixed assets rules in Part 8, allowing capital allowances to apply instead
• Where an election is made, the normal credits and debits rules for intangible fixed assets are switched off, except for certain receipts provisions (accrued receipts, royalties, and reversals of previous accounting gains linked to those receipts)
• On a disposal of the asset, its cost is treated as excluding the elected expenditure, and any credit under Part 8 only arises to the extent the receipt is not already brought into account as a disposal value for capital allowances purposes
• The terms "capital expenditure" and the timing of when such expenditure is incurred take their meaning from the Capital Allowances Act 2001