Finance Act, 1973
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Capital allowances for cars costing over £2,500. |
25.—(1) In relation to a vehicle to which this section applies, section 241 of the Income Tax Act, 1967 , shall have effect as if, for the purposes of subsection (7) of that section, the actual cost of the vehicle were taken to be £2,500 where the expenditure incurred on the provision of the vehicle exceeded that amount and, where a deduction which, apart from this subsection, would be allowed under the said section 241 falls to be reduced by virtue of this subsection, any reference in the Income Tax Acts to a deduction allowed under the said section 241 shall be construed as a reference to that deduction as reduced under this subsection. | |
(2) In relation to a vehicle to which this section applies, the deductions under the said section 241 to be taken into account for the purposes of Chapters II and V of Part XVI of the Income Tax Act, 1967 , in computing the amount of expenditure still unallowed at any time, shall be limited to those computed in accordance with the provisions of subsection (1) and the expenditure incurred on the provision of the vehicle to be taken into account for the said purposes shall be limited to £2,500. | ||
(3) Where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500, any balancing allowance or balancing charge shall be computed, in a case where there are sale, insurance, salvage or compensation moneys, as if the amount of those moneys (or, where in consequence of any provision of the Income Tax Acts other than this subsection some other amount is to be treated as the amount of those moneys, that other amount) were reduced in the proportion which £2,500 bears to the actual amount of the said expenditure. | ||
(4) If, where the expenditure incurred on the provision of a vehicle to which this section applies exceeds £2,500— | ||
(a) the person providing the vehicle (hereinafter referred to as the prior owner) sells the vehicle and the sale is a sale to which section 299 of the Income Tax Act, 1967 , applies, or | ||
(b) the prior owner sells the vehicle or gives it away so that subsection (4) of section 277 of the Income Tax Act, 1967 , or that subsection as applied by subsection (5) of that section, has effect in relation to the purchaser or donee, or | ||
(c) in consequence of a succession to the trade or profession of the prior owner, section 300 (1) of the Income Tax Act, 1967 , has effect, | ||
then, in relation to the purchaser, donee or successor, the price which the vehicle would have fetched if sold in the open market or the expenditure incurred by the prior owner on the provision of the vehicle shall be treated for the purposes of the said section 277, 299 or 300 as reduced in the proportion which £2,500 bears to the actual amount of the said expenditure; and, in the application of subsection (3) to the purchaser, donee or successor, references to the expenditure incurred on the provision of the vehicle shall be construed as references to the expenditure so incurred by the prior owner: | ||
Provided that where this subsection has had effect on any occasion in relation to the vehicle, and no sale or gift of the vehicle has since occurred other than one to which either of the said sections 277 and 299 applies, then, in relation to all persons concerned, the like consequences under this subsection shall ensue as respects a sale, gift or succession falling within paragraphs (a) to (c) which occurs on any subsequent occasion as if the person who in relation to that sale, gift or succession is the prior owner had incurred expenditure on the provision of the vehicle of an amount equal to the expenditure so incurred by the person who was the prior owner on the first-mentioned occasion. | ||
(5) In the application of section 273 (1) of the Income Tax Act, 1967 , to a case where the vehicle is the new plant referred to in that subsection, the expenditure shall be disregarded in so far as it exceeds £2,500, but this provision is without prejudice to the application of the foregoing subsections to the vehicle. | ||
(6) Where the expenditure incurred on the provision of a vehicle exceeds £2,500 but under section 303 (3) of the Income Tax Act, 1967 , any part of it is to be treated as not having been incurred by a person, the amount which (subject to the foregoing provisions of this section) is to be treated for the purposes of Part XVI of the Income Tax Act, 1967 , as having been incurred by that person, shall be reduced in the proportion which £2,500 bears to the said capital expenditure incurred on the provision of the vehicle. |