Income Tax (Trading and Other Income) Act 2005 section 171

Allocation of ancillary capital expenditure

Section 171 sets out how ancillary capital expenditure on a cemetery or memorial garden trade is allocated to a particular period of account for the purpose of calculating the allowable deduction.

• Ancillary capital expenditure is allocated to a period using a formula that apportions residual expenditure according to the ratio of grave-spaces or plots sold in the period to the total of those sold plus those still available for sale at the period end.
• Residual expenditure is the total ancillary capital expenditure incurred up to the end of the period, reduced by expenditure on assets destroyed before the first sale period, an excluded amount relating to pre-1954-55 expenditure, any sale proceeds or compensation for assets disposed of or destroyed, and any amounts already deducted in earlier periods.
• A special calculation strips out a proportion of expenditure incurred before the 1954-55 tax year basis period, based on the ratio of plots sold before that date to plots sold plus those then available for sale.
• The first sale period is the accounting period in which land in the cemetery or memorial garden was first sold for interment or memorial garden purposes, or the basis period for 1954-55 if that is later.