Section 220 Allocation of expenditure to a chargeable period

United Kingdom

F1(A1)

Subsection (1) applies to a company for a chargeable period if—

(a)

at the end of the F2CTA period of account which is the basis period for the chargeable period, the company is a member of a group, and

(b)

the last day of that F3CTA period of account is not also the last day of F4a CTA period of account of the principal company of the group.

(1)

Subject to subsection (2), if F5the company incurs at any time in F6the chargeable period capital expenditure on the provision of plant or machinery for leasing under a finance lease F7or under a qualifying operating lease (see subsection (4)) —

(a)

the part of the expenditure which is proportional to the part of that chargeable period falling before that time is not to be taken into account in determining that F8company's available qualifying expenditure for that period, but

(b)

this does not prevent that part of the expenditure being taken into account in determining that company's available qualifying expenditure for any subsequent chargeable period.

(2)

Subsection (1)(a) does not apply to a chargeable period if a disposal event occurs in that period in respect of the plant or machinery.

F9(3)

The following provisions have effect for the interpretation of this section.

(4)

A “qualifying operating lease” is a plant or machinery lease that meets the following conditions—

(a)

it is not a finance lease,

(b)

it is a funding lease,

(c)

its term is longer than 4 years but not longer than F107 years.

(5)

F11A CTA period of account is the basis period for a chargeable period if the chargeable period coincides with, or falls within, the F12CTA period of account.

(6)

F13A “CTA period of account” is a period of account as defined in F14section 1119 of CTA 2010.

(7)

The provisions of section 170(3) to (6) of TCGA 1992 apply to determine for the purposes of this section—

(a)

whether a company is member of a group, and

(b)

which company is the principal company of the group.

(8)

But, in applying those provisions for the purposes of this section, a company (“the subsidiary company”) that does not have ordinary share capital is to be treated as being a qualifying 75% subsidiary of another company (“the parent company”) if the parent company—

(a)

has control of the subsidiary companyF15..., and

(b)

is beneficially entitled to the appropriate proportion of profits and assets.

(9)

The parent company is beneficially entitled to the appropriate proportion of profits and assets if (and only if) it—

(a)

is beneficially entitled to at least 75% of any profits available for distribution to equity holders of the subsidiary company, and

(b)

would be beneficially entitled to at least 75% of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.

(10)

The provisions of F16Chapter 6 of Part 5 of CTA 2010 (equity holders and profits or assets etc) also apply for the purposes of this section.

(11)

In this section, the following expressions have the same meaning as in Chapter 6A of Part 2 (interpretation of provisions about long funding leases)—

“funding lease”,
“plant or machinery lease”,
“term”, in relation to a lease.

Annotations

Textual amendments

F1: S. 220(A1) inserted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(2)
F2: Words in s. 220(A1)(a) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(2)(a) (with Sch. 2)
F3: Words in s. 220(A1)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(2)(b)(i) (with Sch. 2)
F4: Words in s. 220(A1)(b) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(2)(b)(ii) (with Sch. 2)
F5: Words in s. 220(1) substituted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(3)(a)
F6: Words in s. 220(1) substituted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(3)(b)
F7: Words in s. 220(1) inserted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(3)(c)
F8: Word in s. 220(1) substituted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(3)(d)
F9: S. 220(3)-(11) inserted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(4)
F10: Word in s. 220(4)(c) substituted (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2019 (c. 1), Sch. 14 para. 8(3)
F11: Words in s. 220(5) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(3)(a) (with Sch. 2)
F12: Words in s. 220(5) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(3)(b) (with Sch. 2)
F13: Words in s. 220(6) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(4)(a) (with Sch. 2)
F14: Words in s. 220(6) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(4)(b) (with Sch. 2)
F15: Words in s. 220(8)(a) omitted (6.4.2007) by virtue of Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 402, Sch. 3 Pt. 1 (with Sch. 2)
F16: Words in s. 220(10) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 344(5) (with Sch. 2)

Notes on Part 2

Modifications

C1: Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
C2: Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
C3: Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
C4: Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
C5: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
C6: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
C7: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
C8: Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
C9: Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
C10: Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)

Notes on Chapter 17

Textual amendments

F1: Pt. 2 Ch. 17 heading substituted (8.4.2010) (with effect in accordance with Sch. 4 para. 5 to the amending Act) by Finance Act 2010 (c. 13), Sch. 4 para. 3

Notes on Finance leases and certain operating leases

Textual amendments

F1: S. 219 cross-heading substituted (with effect in accordance with Sch. 9 para. 15(6) of the amending Act) by Finance Act 2006 (c. 25), Sch. 9 para. 15(5)