Income Tax (Trading and Other Income) Act 2005 section 827

Excluded capital expenditure: subsequent treatment of asset

Section 827 deals with what happens to capital expenditure on plant or machinery when a foster carer or other qualifying care provider stops being eligible for qualifying care relief, allowing them to claim capital allowances on assets they still own.

• When qualifying care relief applies, capital expenditure on plant and machinery is excluded from capital allowances under section 826
• Once the individual moves into a chargeable period where qualifying care relief no longer applies, they can begin claiming capital allowances on any such plant or machinery they still own
• The rules treat the individual as if they are bringing the asset into use for qualifying care on the first day of the new non-qualifying period, triggering the provisions of section 13 of the Capital Allowances Act 2001
• The asset is treated as though the individual originally acquired it for other purposes and is now repurposing it, which determines how the capital allowance is calculated