OT26230 - Capital Allowances: Mineral Extraction Allowance

Qualifying Expenditure

Under CAA2001/s394(1), allowances are given on qualifying expenditure which is defined to include:

1. Certain expenditure on mineral exploration and access (CAA2001/s395(1)(a)). See OT26235
2. Expenditure on the acquisition of a mineral asset (CAA2001/s395(I)(b)). See OT26050
3. Expenditure on the construction of any 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 it immediately before that time (CAA2001/s395(1)(d)). The ‘value’ test has to be fulfilled at the time the expenditure is incurred, i.e. it needs to be clear, when the expenditure is incurred, that the works will have little or no value when the source ceases to be worked. The cost of building roads or any means of access, not including land, will normally qualify as "works". CAA2001/399(2) bars relief on "works" which are constructed wholly or mainly for the purpose of subjecting the raw product of a source to any process, unless the process is designed for preparing the raw product for use as such.
4. Restoration expenditure following cessation of trading (CAA2001/s416) See OT26280.
5. Planning permission (CAA2001/s396(2)&(3)). See OT26270