Income Tax (Trading and Other Income) Act 2005 section 172

Exclusion of expenditure met by subsidies

Section 172 restricts the capital expenditure deduction available under section 170 where the expenditure has been funded or subsidised by a third party, while setting out important exceptions where the deduction is still allowed despite such funding.

• Capital expenditure funded directly or indirectly by the Crown, any government or public authority, or any other person is generally excluded from the section 170 deduction
• Expenditure funded by certain Northern Ireland grants declared by the Treasury to correspond to grants under Part 2 of the Industrial Development Act 1982 remains eligible for the deduction
• Expenditure met by insurance or other compensation money relating to an asset that has been destroyed, demolished or put out of use also remains eligible for the deduction
• Expenditure met by a private individual or business (not the Crown or a public authority) remains eligible if that funder cannot themselves claim a tax deduction for the payment in calculating their own trade profits