Capital Allowances Act 2001 section 161D

Exceptions to section 161C(2)

Section 161D sets out the circumstances in which the special rule in section 161C(2) — which allocates decommissioning expenditure related to the reuse of offshore oil infrastructure to the appropriate capital allowances pool in the period it is incurred — does not apply.

• Decommissioning expenditure on UK infrastructure is excluded from section 161C(2) unless the spending relates to compliance with a statutory abandonment programme under the Petroleum Act 1998 or conditions attached to such a programme.
• Expenditure that already qualifies for a capital allowance or tax deduction under another provision is also excluded from section 161C(2).
• Decommissioning expenditure is treated as being "on UK infrastructure" if the plant or machinery is currently UK offshore infrastructure, or was UK offshore infrastructure when it was last used in the trade.
• These exceptions ensure that the special pooling rule only applies where there is a genuine need — that is, where the spending would not otherwise receive tax relief and is connected with an approved decommissioning obligation.