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CA32205 | IBA: Qualifying trade: Meaning thereof

From HM Revenue & Customs · Capital Allowances Manual

A qualifying trade is:

  • a trade of the type listed below or

  • an undertaking carried on by way of trade.

Qualifying trades and Definitions

  • Manufacturing or processing
    Is manufacturing goods or materials CA32210, or subjecting goods or materials to a process CA32213

  • Storage
    A trade consisting in storing goods or materials:

  1. which are to be used in the manufacture of other goods or materials, or

  2. which are to be subjected to a process in the course of a trade,

  3. which, having been manufactured or produced or subjected to a process in the course of a trade, have not yet been delivered to any purchaser, or

  4. on their arrival in the UK from a place outside the UK CA32224.

  • Agricultural contracting
    A trade consisting in:

  1. ploughing or cultivating land occupied by another person, CA32225 or

  2. carrying out any other agricultural operation on land occupied by another person, or

  3. threshing the crops of another person.

  • Foreign plantation
    A trade consisting in working land outside the UK for the purposes of husbandry, forestry or the growing or harvesting of crops CA32226.

  • Fishing
    A trade consisting in catching or taking fish or shellfish CA32227.

  • Mineral extraction
    Mineral extraction is a trade consisting in working a source of mineral deposits CA32228.

Undertakings which are qualifying trades and definitions

  • Electricity undertaking
    An undertaking for the generation, transformation, conversion, transmission or distribution of electrical energy.

  • Water undertaking
    An undertaking for the supply of water for public consumption.

  • Sewerage undertaking
    An undertaking for the provision of sewerage services within the meaning of the Water Industries Act 1991

  • Transport undertaking
    CA32230

  • Inland navigation undertaking

  • Dock undertaking
    A dock includes:

  1. any harbour, and

  2. any wharf, pier, jetty or other works in or at which vessels can unship merchandise or passengers,
    other than a pier or jetty primarily used for recreation CA32232.

  • Tunnel undertaking

  • Bridge undertaking
    Construction expenditure does not qualify under this heading unless it was incurred after the end of 1956-57

  • Highway undertaking

  • Hydraulic power undertaking
    An undertaking for the supply of hydraulic power.

Professions and vocations are not trades and so they cannot be qualifying trades.

A trade does not need to be within the charge to tax to be a qualifying trade. For example, a charity may rent a building in which it makes goods to sell in its shops. The charity is exempt from tax but the manufacture of goods is still a qualifying trade and so the landlord of the building can claim IBA.