Corporation Tax Act 2010 section 306

Capital allowances

Section 306 restricts the use of capital allowances from special leasing arrangements against a company's ring fence profits, with a limited exception for assets used in oil extraction activities by an associated company.

• Capital allowances arising from special leasing (under sections 259 or 260 of CAA 2001) cannot be deducted from a company's ring fence profits.
• An exception applies where the leased asset is used by an associated company to carry on oil extraction activities during the relevant accounting period.
• The relevant accounting period is the first period in which the capital allowance becomes available to the company, regardless of whether the allowance can actually be used in that period.
• Allowances given under section 258 of CAA 2001 are not affected by this restriction because those allowances can only be set against special leasing income, not against other profits such as ring fence profits.