Dredging allowances write off capital expenditure incurred on
dredging by a person carrying on a qualifying trade. For dredging,
a qualifying trade has a wider meaning than it does for IBA. A
trade which is a qualifying trade for IBA purposes or which
consists of maintaining or improving the navigation of a harbour,
estuary or waterway is a qualifying trade for dredging. The
expenditure which qualifies for allowances is called qualifying
expenditure and is written off at a rate of 4% on a straight-line
basis. If the trade is permanently discontinued there is a
balancing allowance that is equal to the expenditure not yet
written off. There are no balancing charges. The deemed permanent
discontinuance of a trade under ITTOIA/S18 or ICTA88/S337 (1) does
not cause a balancing allowance; but the sale of the trade does
unless the sale falls within ICTA88/S343 (2) or is a connected
person sale or a sole or main benefit sale.
