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Wear and tear allowances.
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23.—(1) The Principal Act is amended—
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(a) in section 284(2)—
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(i) in paragraph (a), by substituting “paragraphs (aa), (ab) and (ad)” for “paragraphs (aa) and (ab)”,
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(ii) by inserting the following after paragraph (ac):
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“(ad) Notwithstanding any other provision of this subsection but subject to subsection (4), where capital expenditure is incurred on or after 4 December 2002 on the provision of machinery or plant, the amount of the wear and tear allowance to be made shall be an amount equal to 12.5 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement; but this paragraph shall not apply in the case of—
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(i) machinery or plant to which subsection (3A) relates,
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(ii) machinery or plant which consists of a car within the meaning of section 286, used for qualifying purposes, within the meaning of that section, or
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(iii) machinery or plant provided under the terms of a binding contract evidenced in writing before 4 December 2002 and in respect of the provision of which capital expenditure is incurred on or before 31 January 2003.”,
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and
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(iii) in paragraph (b), by substituting “the amount specified in any other provision of this subsection” for “the amount specified in subparagraph (i) or (ii) of paragraph (a), the amount specified in paragraph (aa) or, as the case may be, the amount specified in subparagraph (i) or (ii) of paragraph (ab)”,
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(b) in section 310, by substituting the following for subsection (2A):
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“(2A) Where, by virtue of subsection (2), a person is entitled to an allowance under section 284 then, for the purposes of determining the amount of wear and tear allowances to be made for any chargeable period or its basis period for the purposes of this section, section 284 shall apply—
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(a) as if the reference in paragraph (aa) of subsection (2) of that section to ‘20 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘20 per cent of the capital sum contributed in the chargeable period or its basis period’, and
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(b) as if the reference in paragraph (ad) of subsection (2) of that section to ‘12.5 per cent of the actual cost of the machinery or plant, including in that actual cost any expenditure in the nature of capital expenditure on the machinery or plant by means of renewal, improvement or reinstatement’ were a reference to ‘12.5 per cent of the capital sum contributed in the chargeable period or its basis period’.”,
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and
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(c) in section 692(2), by substituting “as if the references in paragraphs (a)(i), (aa) and (ad) of that section to 15 per cent, 20 per cent and 12.5 per cent, respectively, were each a reference to 100 per cent” for “as if the reference to paragraph (a)(i) of that section to 15 per cent were a reference to 100 per cent”.
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(2) This section applies as on and from 4 December 2002.
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