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B3.406 Mineral extraction qualifying expenditure

Capital allowances, known as mineral extraction allowances (MEAs) are available for mineral extraction if a person carries on a mineral extraction trade and incurs qualifying expenditure. The definition of these terms is set out below.¹.

A mineral extraction trade is a trade consisting of, or including, the working of a source of mineral deposits, but only to the extent that the profits or gains from the trade are, or would be (if there were any) chargeable to tax². This prevents UK taxable profits being reduced by MEAs that are given in respect of activities where the profits are not subject to UK tax.

Where a company carries on a trade of the working of a source of mineral deposits through one or more permanent establishments outside the UK and a election is made under the exemption for profits or losses of foreign permanent establishments (CTA 2009, s 18A, see D4.801A), that trade is treated as a separate trade not chargeable to tax³.

Mineral deposits are any natural