BIM70039 | Cash basis: expenses: capital expenditure: Transitional arrangements 2017- 2018

Schedule 1, Part 2 of Finance Act (No2) 2017 introduced amendments to S33A ITTOIA 2005 (see ), which are effective from 6 April 2017. To ensure that no person is disadvantaged by the new rules, transitional arrangements were also introduced in respect of capital expenditure incurred during the tax year 2017-2018.

Where capital expenditure incurred in the tax year 2017-18 is not an allowable deduction by virtue of S33A ITTOIA 2005 but would otherwise have been an allowable deduction if not for the amendments made to S33A by Schedule 2 of Finance Act (No2) 2017, the deduction is allowable for that year.

There are exceptions to this and the transitional rules will not apply where the expenditure is in respect of:

1. any part of an unrelieved balance to be brought into account in calculating the profits of the trade for 2017-18 (see BIM70067) which, by virtue of S33A ITTOIA 2005, would not be an allowable deduction if assumed to have been paid in 2017-18

2. any assets not yet fully paid for

However, if any expenditure in respect of 1 or 2 above was actually paid in the year 2017-18 the transitional rule will still apply.