CG15425 - Capital allowances: asset acquired at capital allowance written down value
TCGA92/S41(3)
TCGA92/S41(3) applies where an asset is disposed of at a loss and the person making the disposal acquired the asset at its capital allowances written down value:
- by a transfer by way of a sale in relation to which an election under CAA01/S569 was made (sales without change of control or between connected persons), or
- by a transfer to which CAA01/S268 applies (succession to trade on death)
Section 41(3) requires that the capital gains allowable expenditure is restricted to take account of both:
- capital allowances made to the transferor (including previous transferors) in respect of the asset,
and
- capital allowances made to the transferee (the person making the disposal).
A similar restriction of the capital gains loss is required where:
- CAA01/S264(3) (partnership uses the property of a partner),
or
- CAA01/S558 (change of persons comprising the partnership that carries on the qualifying activity)
have been applied