Corporation Tax Act 2010 section 126

Assumptions in relation to capital allowances

Section 126 sets out the assumptions that must be made about capital allowances when recalculating the EEA amount under United Kingdom tax rules, specifically regarding plant and machinery held by the surrendering company.

• This section applies when the surrendering company holds plant or machinery during the relevant EEA accounting period and capital allowances need to be considered in the recalculation.
• The company is treated as having acquired the plant or machinery on the first day of the EEA accounting period, with the expenditure being equal to the market value of those assets at that date.
• This deemed acquisition rule follows the approach in section 13 of the Capital Allowances Act, which deals with assets brought into use for a qualifying purpose.
• All relevant plant and machinery allowance rules from the Capital Allowances Act are applied when carrying out the recalculation of the EEA amount.