Taxes Consolidation Act 1997 section 295

Option in case of succession under will or intestacy

Section 295 allows a person who inherits a trade from a deceased trader to elect for special treatment of the machinery or plant used in that trade, so as to defer the normal balancing adjustment that would arise on the death.

• When a trader dies, the trade is permanently discontinued, which would normally trigger a balancing allowance or balancing charge on the machinery or plant used in the trade.
• A beneficiary who succeeds to the trade may elect in writing to the inspector to have the machinery or plant treated as acquired at the lower of the expenditure still unallowed or the open market value at the date of succession.
• Where the election is made, no balancing charge arises on the deceased (or the executors), although a balancing allowance may still arise where the open market value is lower than the unallowed expenditure.
• If a balancing event later occurs (such as the beneficiary selling the plant), the balancing allowance or charge is calculated as though the deceased had survived, continued to own the plant and carry on the trade, and had been granted all the allowances actually given to the beneficiary up to that point.