# The Investment Allowance and Cluster Area Allowance (Investment Expenditure) Regulations 2017, Note: Explanatory note

Extent: E+W+S+N.I.

(This note is not part of the Regulations)
These Regulations provide for specified items of expenditure to be brought within the definition of investment expenditure for the purposes of the investment allowance (Chapter 6A of Part 8 of the Corporation Tax Act 2010) and the cluster area allowance (Chapter 9 of Part 8 of the Corporation Tax Act 2010).
Regulation 1 provides for citation, commencement and effect. Authority for the retrospective effect is given by sections 332BA(2) and 356JE(2) of the Corporation Tax Act 2010.
Regulation 2 provides that operating expenditure that is within regulation 3 or leasing expenditure that is within regulation 4 is investment expenditure, subject to regulations 5, 6 and 7.
Regulation 3 specifies the conditions that must be met for expenditure to be operating expenditure.
Regulation 4 specifies the conditions that must be met for expenditure to be leasing expenditure.
Regulation 5 requires expenditure to exceed any amounts received (save for those listed in sub-paragraphs (a) and (b)) by a company or its associated companies under a “qualifying lease” (defined in paragraph (2)) in order for it to qualify as investment expenditure.
Regulation 6 provides that where an asset is subleased, or a sublease is modified, on or after the date the Regulations come into force, leasing expenditure by any sublessee is capped at the amount of leasing expenditure incurred under the head lease during the term of the sublease.
Regulation 7 removes from the scope of investment expenditure any expenditure that arises in connection with any arrangements which have as a main purpose one of the purposes listed in paragraph (1).
Regulation 8 specifies when expenditure is treated as incurred for the purpose of generating investment allowance or cluster area allowance under Chapter 6A or Chapter 9 of Part 8 of the Corporation Tax Act 2010.
A Tax Information and Impact Note covering this instrument was published on 16th December 2015 alongside draft legislation explaining changes to the Investment and Cluster Area allowances and is available on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.

---
Source: https://www.legislation.gov.uk/uksi/2017/292/note (the official version)
Page: https://openlegislation.uk/investment-allowance-and-cluster-area-allowance-investment-expenditure-regulations-2017/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.