OT26208 - Capital Allowances: Mineral Extraction Allowance

Rates of Writing Down Allowances

The rate is 10% only in respect of items of qualifying expenditure on the acquisition of a mineral asset, e.g. a licence (CAA2001/s418(1)(a)/s395(1)(b)).

The main items of qualifying expenditure on which allowances of 25% are due are:

1. Mineral exploration and access (CAA2001/s395(1)(a))
2. The construction of works in connection with the working of a source of mineral deposits, being works which when the source is no longer worked, are likely to be of little or no value to the person working the source immediately before work ceases (CAA2001/s395(1)(d)/s414).
3. Unsuccessful planning applications (CAA2001/s396(2))

Where a mineral asset is purchased, there may be occasions where the allowance is partly at 10% and partly at 25%. There is further comment on this at OT26209.