Income Tax (Trading and Other Income) Act 2005 section 825B

Plant or machinery used for care business

Section 825B deals with what happens when a foster carer who previously had disposal receipts deemed under section 825A still owns and uses some of that plant or machinery for their care business when they move back to the normal capital allowances basis.

• When a foster carer returns to the normal tax basis (the "re-start date"), any plant or machinery they still own and use for the care business is treated as if newly acquired for capital allowances purposes on that date.
• The amount of deemed expenditure on this retained plant or machinery is the lower of its market value on the re-start date and the disposal receipts previously brought into account in the pool under section 825A.
• If the individual was already treated as incurring notional expenditure before the re-start date because some of that plant or machinery was brought into use for a different qualifying activity, the deemed expenditure figure is reduced accordingly — unless the equipment used for the other activity is the same retained plant or machinery.
• Whether the retained plant or machinery is treated as provided wholly or only partly for the care business depends on whether its actual use on the re-start date is wholly or only partly for those purposes.