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

Subsequent disposal events

Section 825D deals with what happens for capital allowances purposes when plant or machinery — previously brought into use under the foster care relief rules — is subsequently disposed of.

• The section applies to plant or machinery that a foster carer is treated as bringing into use for their care business or for another qualifying activity under the foster care relief provisions.
• The first disposal event occurring on or after the date the item was brought into use (the "applicable date") is treated as the very first disposal event for capital allowances purposes, and a disposal value must always be brought into account — even where the normal rules would not require one.
• When calculating the cap on the disposal value, the qualifying expenditure used is the full original cost the individual actually incurred on the item, not the reduced proportion that was allocated to the care business or other qualifying activity under the foster care relief rules.
• This ensures that disposal values on exit are measured against the true original expenditure, preventing any distortion caused by the earlier apportionment under the foster care relief provisions.