Income Tax (Trading and Other Income) Act 2005 section 334C

Unrelieved qualifying expenditure

Section 334C provides a deduction for unrelieved capital allowance expenditure when a property business switches to the cash basis of accounting.

• When a property business enters the cash basis, any unrelieved qualifying expenditure (i.e. capital allowance costs not yet fully deducted) carried forward from the previous tax year may qualify for a cash basis deduction
• The deduction is the "cash basis deductible amount" — the amount that would have been deductible under cash basis rules if the expenditure had been paid in the current tax year
• The cash basis deductible amount must be determined on a basis that is just and reasonable in all the circumstances
• This section does not apply where section 334D (which deals with assets not fully paid for) applies instead