Revenue Note for Guidance
This section provides for an investment allowance of 20 per cent of exploration expenditure (whether successful or abortive) incurred on or after 6 April 1974 and before 1 January 2011.
(1) In addition to any mine development allowance granted in respect of exploration expenditure in relation to which section 673 has effect, a further allowance (to be known as an “exploration investment allowance”) amounting to 20 per cent of such expenditure is granted. This allowance is to be made in taxing the trade (that is, in charging the profits of the trade in the case of income tax or in computing trading income in the case of corporation tax). For income tax purposes, where full effect cannot be given to any allowance for a year of assessment, the allowance or part of it may be carried forward for set-off against trading profits in subsequent years. The allowance is restricted to expenditure incurred on or after 6 April 1974 and before 1 January 2011.
(2)(a) No allowance is to be granted in respect of exploration expenditure which was incurred before 6 April 1974, even where a provision of the Tax Acts may provide that such expenditure is deemed to be incurred on or after that date, or which is deemed to have been incurred by a person other than the person who incurred the expenditure.
(2)(b) The rules above (subsection (2)(a)) do not apply in respect of expenditure deemed under section 675 to have been incurred by a body corporate which is in the same group as the body corporate which actually incurred the expenditure.
Relevant Date: Finance Act 2019