286A Wear and tear allowances for licences for public hire vehicles.

(1)In this section—

“licence” means a taxi licence or a wheelchair accessible taxi licence granted in respect of a small public service vehicle by a licensing authority in accordance with the Road Traffic (Public Service Vehicles) Regulations, 1963 to 2000, made under section 82 of the Road Traffic Act, 1961, as amended by section 57 of the Road Traffic Act, 1968;

“qualifying expenditure” means—

(a) capital expenditure incurred on the acquisition of a licence on or before 21 November 2000 and for the purposes of this section, where capital expenditure is so incurred it shall be deemed to have been incurred on 21 November 1997 or, if later, on the day on which the trade commenced, or

(b) where a licence formed part of an inheritance taken by an individual on or before 21 November 2000 and inheritance tax or probate tax was paid in relation to that licence, an amount equal to the open market value of the licence used for the purpose of inheritance tax or probate tax if that amount is greater than the amount of the capital expenditure incurred on the acquisition of the licence and, where this paragraph applies, the first-mentioned amount shall be deemed to have been capital expenditure incurred on the acquisition of a licence on 21 November 1997 or, if later, on the date on which the trade commenced;

“qualifying trade”, means a trade carried on by an individual which consists of the carriage of members of the public for reward in a vehicle in respect of which a licence has been granted but excluding any trade or part of a trade which consists of the letting of such a vehicle.

(2) (a) Where an individual carrying on a qualifying trade proves to have incurred qualifying expenditure, then, for the purposes of this Chapter, other than sections 298 and 299, and for the purposes of Chapter 4 of this Part—

(i) the licence shall, subject to paragraph (c), be treated as machinery or plant,

(ii) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(iii) for so long as the individual is entitled to the licence, that machinery or plant shall be treated as belonging to that individual.

(b) Where an individual who has incurred qualifying expenditure carries on a qualifying trade and uses a vehicle, being the vehicle to which the machinery or plant referred to in paragraph (a) relates, partly for letting to another person and partly for the purposes of the qualifying trade, the machinery or plant shall be deemed for the purposes of section 284(1) to be used only for the purposes of the qualifying trade.

(c) Notwithstanding paragraph (a), where an individual who has incurred qualifying expenditure in relation to more than one licence carries on a qualifying trade and lets more than one of the vehicles, which are used for the purposes of the trade, being the vehicles to which the machinery or plant referred to in paragraph (a) relates, to another person or persons for use also by that other person or persons, paragraph (a) shall apply in respect of so much of that machinery or plant as relates to one licence only (in this section referred to as “the relevant licence”).

(3) Where an individual who is not, apart from this subsection, entitled to allowances under this Chapter by virtue of this section, becomes the beneficial owner of a licence ^[2]>on the death of his or her spouse, and that spouse^<[2][2]>on the death of his or her spouse or civil partner, and that spouse or civil partner^<[2]—

(a) had incurred qualifying expenditure in respect of the licence, and

(b) had carried on a qualifying trade,

then, for the purposes of this section, if the individual lets the vehicle to which the licence relates, or lets the licence, for use for the purposes of a qualifying trade carried on by another person—

(i) the individual shall be deemed to have incurred the qualifying expenditure in respect of the licence,

(ii) that licence shall be treated as machinery or plant, and

(iii) the letting of that vehicle or of that licence by the individual shall be deemed to be a qualifying trade carried on by the individual which commenced on the date of the first letting of that vehicle,

but this subsection shall apply in relation to an individual as respects one licence only.

(4) In determining what capital allowances are to be made in taxing the trade of an individual to which subsection (2) refers for any year of assessment, section 284(2)(aa) (inserted by the Finance Act, 2001) shall apply—

(a) as if the machinery or plant to which subsection (2) refers were machinery or plant to which section 284(2)(aa) applies, and

(b) as if the reference to “on or after 1 January 2001” in section 284(2)(aa) were a reference to “on 21 November 1997”.

(5) (a) This subsection shall apply to an individual to whom paragraph (b) or (c) of subsection (2) relates who lets a vehicle to which subsection (2)(b) relates or a vehicle relating to a relevant licence.

(b) Notwithstanding section 381, where relief is claimed under that section in respect of a loss sustained in a qualifying trade, the amount of that loss, in so far as by virtue of section 392 it is referable to an allowance under this section, shall be treated for the purposes of subsections (1) and (3)(b) of section 381 as reducing income only from a letting to which paragraph (a) refers and shall not be treated as reducing any other income.

(6) Subsection (7) of section 953 shall apply to an excess, referred to in that subsection, arising by virtue of an allowance made under this section as if the reference in paragraph (a)(ii) of that subsection to “section 438(4)” were a reference to this section.

(7) This section shall be deemed to have come into operation as on and from 6 April 1997.