Taxes Consolidation Act 1997 section 406

Restriction on use of capital allowances on fixtures and fittings for furnished residential accommodation

Section 406 restricts the use of capital allowances on fixtures and fittings for furnished residential rental accommodation.

• The restriction applies where capital expenditure on fixtures and fittings falls within section 284(7) — that is, expenditure on furnishing a house let solely as a dwelling on bona fide commercial terms.
• Where a wear and tear allowance is available under section 284 in respect of that expenditure, special restrictions apply to how that allowance may be used.
• The allowance may not be set off against income of a different class (section 305(1)(b) is disapplied).
• The allowance may not be surrendered to another group company by way of group relief (sections 308(4) and 420(2) are disapplied).

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