Taxes Consolidation Act 1997 section 692

Development expenditure: allowances and charges

Section 692 provides a 100% writing-down allowance for capital expenditure on assets representing development expenditure incurred in connection with a petroleum trade, and sets out the conditions and restrictions that apply to this allowance.

• Assets representing development expenditure are treated as machinery or plant for capital allowance purposes, qualifying for a 100% writing-down allowance instead of the normal wear and tear rates.
• The allowance cannot be claimed for any period ending before petroleum production in commercial quantities has begun from the relevant field for which the assets were provided.
• Development expenditure qualifying for the 100% allowance is excluded from other capital allowance regimes, including industrial buildings, initial allowances, mine development, patent, scientific research, know-how, and dredging allowances.
• Assets leased to a petroleum trader are treated as development expenditure assets in the hands of the lessor, who receives the 100% allowance but may only set it against leasing income from those assets under the ring-fence rules.