Capital Allowances Act 2001 section 405

Qualifying expenditure where buildings or structures cease to be used

Section 405 provides for additional qualifying expenditure to arise when buildings or structures on mineral extraction land, whose value was previously excluded from qualifying expenditure under the undeveloped market value rule, permanently cease to be used.

• Where section 404 has limited a buyer's qualifying expenditure by excluding the undeveloped market value of land, and that value includes buildings or structures, additional relief may become available when those buildings or structures permanently cease to be used
• The buyer is treated as incurring new qualifying expenditure on acquiring a mineral asset, equal to the unrelieved value of the buildings or structures, at the point they permanently cease to be used
• The unrelieved value is calculated as the value of the buildings or structures at the date of acquisition (excluding the underlying land value), reduced by any net capital allowances (allowances less balancing charges) the buyer has already received in respect of those buildings, structures or assets within them
• The timing of the acquisition for purposes of this section is determined by the actual date of acquisition, and is not affected by the general rules in section 434 about when expenditure is treated as incurred