Income Tax (Trading and Other Income) Act 2005 section 165

Deduction for site preparation expenditure

Section 165 sets out the rules allowing a tax deduction for capital expenditure incurred in preparing a site for use as a waste disposal facility, where that expenditure would otherwise go unrelieved for income tax purposes.

• A deduction for site preparation costs is available only in a period of account during which waste materials are actually deposited on the site, and only if the trader held a valid waste disposal licence when waste was first deposited there.
• The amount of the deduction for each period is determined by the allocation method set out in section 166, which spreads the expenditure over the life of the site.
• Where a predecessor incurred the site preparation expenditure and subsequently transferred the entire site to the current trader, the current trader inherits the right to claim the deduction as though they had incurred the expenditure themselves.
• A predecessor is defined as someone who ceased carrying on the trade (or ceased so far as it related to the site) and transferred the whole site to the current trader, regardless of whether the precise legal interest transferred is the same as that originally held.