OT21440 | Field allowance: transfer of field allowance where the equity share changes

[Field Allowance was superseded by Investment Allowance which was introduced by Fiance Act 2015 and applies to expenditure incurred on or after 1 April 2015. See OT21550 for guidance on Investment Allowance.]

Where a company disposes of all or part of its share in the equity in a field, all or part of the unactivated amount of the field allowance for the field transfers to the transferee.

For the transferor, the unactivated amount is reduced by the fraction:

(E1 - E2)/E1

where

• E1 is the transferor’s share of the equity in the field immediately before the disposal, and

• E2 is the transferor’s share of the equity in the field immediately after the disposal.

The unactivated amount available for a transferee depends on whether the transferee has acquired all or part of the transferred interest.

The unactivated amount which passes to the transferee is given by the formula:

R x E3/(E1 - E2)

where

• R is the amount of the reduction determined for the transferor,

• E3 is the share of the equity in the field that the transferee has acquired from the transferor, and

• E1 - E2 is (following the meaning above) the share disposed of by the transferor.