409H Restriction on use of capital allowances.

(1) As respects any tax year, in the case of an individual who carries on a trade, including a trade carried on by 2 or more individuals in partnership, otherwise than as an active trader or an active partner, where a capital allowance, in relation to a building or structure, is made to the individual either in taxing that trade or by means of discharge or repayment of tax to which the individual is entitled by reason of the individual carrying on the trade concerned, then—

(a) the capital allowance shall be made to the individual only in computing the income or profits from the trade concerned, and

(b) the capital allowance shall not be made in computing any other income or profits or in taxing any other trade or in charging any other income to tax.

(2) As respects any chargeable period, in computing the amount of profits or gains for the purposes of Case V of Schedule D—

(a) any capital allowance in respect of a building or structure to be made to a person—

(i) shall not exceed the specified amount of rent from the building or structure for that chargeable period,

(ii) shall be made in charging the specified amount of rent under Case V of Schedule D for that chargeable period, and

(iii) shall be available in charging the specified amount of rent,

(b) section 278 shall apply with any modifications necessary to give effect to paragraph (a), and

(c) section 305(1)(c) shall apply in relation to a capital allowance to be made in accordance with paragraph (a).

(3) Notwithstanding any other provisions of this Part, and as respects the tax year or accounting period, as the case may be, in which the relevant day occurs, any capital allowance in relation to a building or structure shall not be made—

(a) in charging profits or gains of a trade to income tax, other than the profits or gains of the trade referred to in subsection (1)(a), or

(b) in charging any amount of rent under Case V of Schedule D, other than in charging the specified amount of rent,

where the profits or gains arise, or that rent arises, in the period beginning on the relevant day and ending on the last day of the tax year or the accounting period concerned.