Taxes Consolidation Act 1997 section 561

Wasting assets qualifying for capital allowances

Section 561 disapplies the wasting asset write-off rules where the asset qualifies for capital allowances, and sets out how to apportion costs and proceeds where the asset only partly qualifies.

• The straight-line write-off rules in section 560(3)–(5) do not apply to wasting assets that have fully qualified for capital allowances throughout the period of ownership.
• Where an asset only partly qualifies for capital allowances, the disposal proceeds and cost must be apportioned by reference to the extent the expenditure qualified for capital allowances, and separate CGT computations are made for each part.
• The wasting asset write-off rules continue to apply to the non-qualifying part of the asset, but the qualifying part is instead dealt with under the capital allowance loss restriction rules in section 555.
• If an apportionment of disposal proceeds has already been made for capital allowance or balancing charge purposes, that same apportionment must be used for CGT purposes.