Section 409E Income tax: ringfence on use of certain capital allowances on certain industrial buildings and other premises
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Amendments
Section 409E inserted by Finance Act 2003 section 13(1).
(1) In this section-
"company" has the same meaning as in section 4;
"rent" has the same meaning as in Chapter 8 of Part 4;
"relevant interest" has the same meaning as in section 269;
"residue of expenditure" shall be construed in accordance with section 277;
"specified amount of rent", in relation to a specified building and an individual for a year of assessment, means the amount of the surplus in respect of the rent from the specified building to which the individual becomes entitled for the year of assessment, as computed in accordance with section 97(1);
"specified building" means-
(a) a building or structure, or a part of a building or structure, which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Chapter 1 of Part 9, or
(b) any other building or structure, or a part of any other building or structure, in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A,
in respect of-
(i) the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the part of the building or structure, or
(ii) the residue of that expenditure.
What definitions apply in relation to ringfencing of capital allowances on industrial buildings?
(1) A specified building is a premises which qualifies for capital allowance purposes as an industrial building or deemed industrial building (section 268), a third level educational premises (section 843), or a child care facility (section 843A)....
(2) This section applies where-
(a) at any time beginning on or after 1 January 2003 a company is entitled to the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building,
(b) subsequent to the time referred to in paragraph (a) an individual becomes entitled to that relevant interest or any part of that relevant interest, whether or not subsequent to that time any other person or persons had previously become so entitled, and
(c) the individual is entitled, in charging income under Case V of Schedule D, to an allowance under Chapter 1 of Part 9 in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure.
(3) Where this section applies, then, notwithstanding any other provision of the Income Tax Acts-
(a) any allowance to be made to the individual for any year of assessment (being the year of assessment 2003 or any subsequent year of assessment) under Chapter 1 of Part 9, in respect of the capital expenditure referred to in subsection (2)(a) or the residue of that expenditure, shall-
(i) not exceed the specified amount of rent for that year of assessment,
(ii) be made in charging the specified amount of rent under Case V of Schedule D for that year of assessment, and
(iii) be available only in charging the specified amount of rent,
(b) section 278 shall apply with any modifications necessary to give effect to paragraph (a), and
(c) section 305(1)(c) shall apply in relation to an allowance to be made in accordance with paragraph (a).
What restrictions apply to excess capital income allowances on third level premises or childcare facilities?
(3) Where the conditions in (2) are met, then the allowance available to you is ringfenced to such amount of the capital expenditure as does not exceed the specified amount of rent (see (1))....
