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Capital allowances for computer software.
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41.—(1) Part 9 of the Principal Act is amended—
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(a) in section 288—
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(i) by the substitution in subsection (1)(d) of “that machinery or plant” for “the computer software concerned”,
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(ii) by the insertion after subsection (3) of the following:
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“(3A) Where, in relation to an event referred to in subsection (1)(d), a balancing allowance or balancing charge is to be made to or, as the case may be, on a person for the chargeable period related to that event and following that event, the person retains an interest in the machinery or plant, then, for the purposes of this Chapter—
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(a) the amount of capital expenditure still unallowed at the time of the event, which is to be taken into account in calculating the balancing allowance or balancing charge, shall be such portion of the unallowed expenditure relating to the machinery or plant in question as the sale, insurance, salvage or compensation moneys bear to the aggregate of those moneys and the market value of the machinery or plant which remains undisposed of, and the balance of the unallowed expenditure shall be attributed to the machinery or plant which remains undisposed of, and
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(b) the amount of capital expenditure incurred on the machinery or plant in question shall be treated as reduced by such portion of that expenditure as the sale, insurance, salvage or compensation moneys bear to the aggregate of those moneys and the market value of the machinery or plant which remains undisposed of.”,
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and
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(iii) by the insertion in subsection (4) after paragraph (b) of the following:
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“(c) Where subsection (3A) applies, the amount of any allowances referred to in paragraph (b) made in respect of the machinery or plant in question shall, for the purposes of this Chapter, be apportioned so that:
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(i) such portion of those allowances as the sale, insurance, salvage or compensation moneys bear to the aggregate of those moneys and the market value of the machinery or plant which remains undisposed of, shall be attributed to the grant of the right to use or otherwise deal with, referred to in subsection (1)(d), and
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(ii) the balance of those allowances shall be attributed to the machinery or plant which remains undisposed of.”,
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and
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(b) by the insertion in section 318 after paragraph (a) of the following:
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“(aa) as respects machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, where the event is the grant of a right to use or otherwise deal with the whole or part of that machinery or plant, the consideration in money or money's worth received by that person for the grant of the right,”.
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(2) This section shall apply as on and from 29 February 2000.
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