What is CAA 2001 ?

by admin on January 25, 2013

The Capital Allowances Act 2001 is a piece of legislation designed to simplify the tax law relating to capital allowances. It describes itself as ‘an act to restate, with minor changes, certain enactments relating to capital allowances.’ Capital allowances have existed in one form or another since 1878 to allow for the depreciation of capital (i.e. plant and machinery). They were originally limited to mills and factories but over time, many more areas of commercial activity were added, with most ‘productive’ industries (i.e. those that produced physical  ‘things’ as opposed to retail and distribution) being included in 1945. By the 1980s, almost all areas of commercial activity were covered by the law. However, after 1995 there was a move to rewrite existing UK tax legislation when the Inland Revenue presented a report called ‘The path to tax simplification.’  This was because it was felt that tax legislation in general was poorly worded and would benefit from being better structured and written in plain English.

Because of this the Capital Allowances Act 2001 was designed to rectify the problems in the field of capital allowances; the precursor Capital Allowances Act 1990 was deemed too complex. Even an Inland Revenue specialist said ‘The legislation is complex, and reading legislation is not as difficult as reading a foreign language but it’s certainly like that.’  It was found to be suffering from ‘The illogical ordering of sections‘  and ‘The use of arcane English and dense legal text‘ . The new act however has largely solved this and is now considered to be ‘an easy to navigate and more accessible document.’

It should be noted that the main point of this act was to change the language rather than the content of the legislation.

You can find the full text of the act Here



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