Corporation Tax Act 2010 section 101

Meaning of "capital allowance excess"

Section 101 defines what is meant by a "capital allowance excess" for the purposes of group relief, specifically in relation to excess capital allowances arising from special leasing activities that a company may surrender to other group members.

• A capital allowance excess is the amount by which a company's plant and machinery capital allowances from special leasing exceed its leasing income for the surrender period
• Only capital allowances arising in the current surrender period may be included — allowances brought forward from earlier periods must be excluded
• When measuring the leasing income against which the excess is calculated, that income must be taken before any deductions for losses from other periods or for capital allowances
• The effect is to isolate the current period's leasing allowances and current period's leasing income so that the true in-year surplus can be identified and surrendered as group relief