Income Tax (Trading and Other Income) Act 2005 section 604

Contributions not made by public bodies nor eligible for tax relief

Section 604 sets out when a person whose expenditure has been met by a third-party contribution can still be treated as having incurred that expenditure themselves, provided the contributor is not a public body and has not obtained tax relief on the contribution.

• Where someone else pays for your expenditure, you may still be treated as having incurred it yourself if two conditions are met
• The first condition is that the person who met your expenditure is not a public body
• The second condition is that the contributor cannot claim a capital allowance for their contribution, and cannot deduct it in calculating their own trading profits
• When testing whether a capital allowance is available, the contributor is assumed to be within the charge to tax regardless of their actual tax position