Income Tax Act 1945
| Jurisdiction | UK Non-devolved |
| Citation | 1945 c. 32 |
| Year | 1945 |
Income Tax Act, 1945,
(8 & 9 Geo. 6.) CHAPTER 32.
An Act to amend the law relating to income tax in certain respects.
[15th June 1945]
Be it enacted by the King's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Part I.
Industrial Buildings and Structures, etc.
1 Initial allowances.
(1) Subject to the provisions of this Act, where, on or after the appointed day, a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade carried on either by him or by such a lessee as is hereinafter mentioned, there shall be made to the person who incurred the expenditure, for the year of assessment hereinafter mentioned, an allowance (in this Part of this Act referred to as ‘an initial allowance’) equal to one-tenth thereof.
The said lessees are lessees occupying the building or structure on the construction of which the expenditure was incurred under a lease to which the relevant interest, as defined for the purposes of this Part of this Act, is reversionary.
(2) The said year of assessment shall, in the case of a person incurring expenditure, be the year of assessment in his basis period for which the expenditure was incurred:
Provided that where the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary, and the tenancy begins after the incurring of the expenditure, the said year of assessment shall be the year of assessment in which the tenancy begins.
(3) The preceding provisions of this section shall apply in relation to expenditure incurred by a person on or after the sixth day of April, nineteen hundred and forty-four, but before the appointed day, as if it had been incurred by him on the appointed day:
Provided that—
(a ) the amount by reference to which the initial allowance is to be calculated shall, instead of being the amount of the expenditure, be the amount thereof less the total amount of the relevant mills, factories and exceptional depreciation allowances made for years of assessment before that in which the appointed day falls; and
(b ) no initial allowance shall be allowed if—
(i) before the appointed day, the relevant interest in the building or structure is sold or, being a leasehold interest, comes to an end otherwise than on the person entitled thereto acquiring the interest which is reversionary thereon; or
(ii) before the appointed day, the building or structure is demolished or is destroyed; or
(iii) at any time before the appointed day the building or structure is, but on the appointed day the building or structure is not, an industrial building or structure.
(4) Notwithstanding anything in this section, no initial allowance shall be made in respect of any expenditure if, when the building or structure comes to be used, it is not an industrial building or structure, and where an initial allowance has been granted in respect of any expenditure otherwise than in accordance with the provisions of this section, all such additional assessments shall be made as are necessary to secure that effect is given to those provisions.
(5) Any expenditure incurred on or after the sixth day of April, nineteen hundred and forty-four, for the purposes of a trade by a person about to carry it on shall be treated for the purposes of the preceding provisions of this section as if it had been incurred by that person on the first day on which he does carry it on.
2 Annual allowances.
(1) Subject to the provisions of this Act, where—
(a ) any person is, at the end of his basis period for the year of assessment in which the appointed day falls or any subsequent year of assessment, entitled to an interest in a building or structure; and
(b ) at the end of the said basis period, the building or structure is an industrial building or structure; and
(c ) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure,
an allowance (in this Part of this Act referred to as ‘an annual allowance’) equal to one-fiftieth of that expenditure shall be made to him for that year of assessment.
(2) Where, at any time on or after the appointed day, the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, the annual allowance in respect of that expenditure shall, in the case of years of assessment the basis periods for which end after the time of that sale,—
(a ) be computed by reference to the residue (as defined in the provisions of this Part of this Act relating to the writing off of expenditure) of that expenditure immediately after the sale; and
(b ) be the fraction of the said residue the numerator of which is one and the denominator of which is the number of years of assessment comprised in the period which—
(i) begins with the first year of assessment for which the buyer is entitled to an annual allowance in respect of the expenditure or would be so entitled if the building or structure had at all material times continued to be an industrial building or structure; and
(ii) ends with the fiftieth year of assessment after that in which the building or structure was first used,
and so on for any subsequent sales.
(3) Notwithstanding anything in the preceding provisions of this section, in no case shall the amount of an annual allowance made to a person for any year of assessment in respect of any expenditure exceed what, apart from the writing off falling to be made by reason of the making of that allowance, would be the residue of that expenditure at the end of his basis period for that year of assessment.
3 Balancing allowances and balancing charges.
(1) Where any capital expenditure has been incurred on the construction of a building or structure, and, on or after the appointed day, any of the following events occurs while the building or structure is an industrial building or structure, that is to say—
(a ) the relevant interest in the building or structure is sold; or
(b ) that interest, being an interest depending on the duration of a foreign concession, comes to an end on the coming to an end of that concession; or
(c ) that interest, being a leasehold interest, comes to an end otherwise than on the person entitled thereto acquiring the interest which is reversionary thereon; or
(d ) the building or structure is demolished or destroyed, or, without being demolished or destroyed, ceases altogether to be used,
an allowance or charge (in this Part of this Act referred to as ‘a balancing allowance’ or ‘a balancing charge’) shall, in the circumstances mentioned in this section, be made to, or, as the case may be, on, the person entitled to the relevant interest immediately before that event occurs, for the year of assessment in his basis period for which that event occurs:
Provided that no balancing allowance or balancing charge shall be made to or on any person for any year of assessment by reason of any event occurring after the end of his basis period for the fiftieth year of assessment after that in which the building or structure was first used.
(2) Where there are no sale, insurance, salvage or compensation moneys, or where the residue of the expenditure immediately before the event exceeds those moneys, a balancing allowance shall be made and the amount thereof shall be the amount of the said residue or, as the case may be, of the excess thereof over the said moneys.
(3) If the sale, insurance, salvage or compensation moneys exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the excess, or, where the residue is nil, to the said moneys.
(4) If, for any of the relevant years of assessment (as defined for the purposes of this subsection), neither an annual allowance nor a scientific research allowance has been made, the two last preceding subsections shall have effect subject to the modification that the amount of the balancing allowance, or, as the case may be, the amount on which the balancing charge is to be made, shall be reduced by applying thereto the fraction, the numerator of which is the number of the relevant years of assessment for which an annual allowance or scientific research allowance has been made in respect of the expenditure and the denominator of which is the total number of the relevant years of assessment.
In this subsection, the expression ‘the relevant years of assessment’ means all years of assessment after that in which the building or structure was first used for any purpose up to and including that in which the event takes place which gives rise to the allowance or charge:
Provided that where, before the said event but on or after the appointed day, the building or structure has been sold while an industrial building or structure, the said expression means all years of assessment for which either—
(a ) an annual allowance is made by reason of the building or structure being an industrial building or structure at any time between the sale and the event, or, where there has been more than one such sale, between the last such sale and the event; or
(b ) an annual allowance would have fallen to be made if the building or structure had been an industrial building or structure at all times between the sale, or, as the case may be, the last such sale, and the event.
(5)...
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