capital allowances
A person who is engaged in qualifying activities can claim capital allowances on its qualifying expenditure on plant and machinery.
Qualifying expenditure is capital expenditure on items of plant and machinery, this includes expenditure on the alteration of land for the purpose only of installing plant or machinery.
Expenditure which does not qualify for allowances
Expenditure on buildings, structures and land, as well as expenditure on certain assets which are incorporated into buildings do not qualify for capital allowances.
The general rule is that qualifying expenditure is - expenditure on the provision of plant or machinery wholly or partly for the purposes of a qualifying activity that the person incurring the expenditure carries on, and the person incurring the expenditure owns the plant or machinery as a result of incurring the expenditure CA23010.
However, plant is more difficult to define. Because the meaning of plant can be broad, CAA 2001 generally seeks to clarify what cannot be plant. Sections 21 and 22 make clear that a ‘building’ or fixed ‘structure’ cannot be plant. However, there is a long list of exemptions set out in section 23. The items listed are not ‘buildings’ or ‘structures’, so could be plant, but are not automatically designated as such. Otherwise, plant is defined by a nineteenth century case about a horse, which the courts still routinely refer to with approval. This defines ‘plant’, in essence, as ‘apparatus’ used by a business (Yarmouth v France (1887) LR 19 QBD 647). Since there is no statutory definition of plant guidance about the meaning of plant has to be found in case law. The cases about the meaning of plant go back a long way. The first case in which the meaning of plant was considered was Yarmouth v France (1887) 19QBD647. It was not a tax case but was a case under the Employer's Liability Act 1880. In that case Lindley LJ said that:
In its ordinary sense it (that is, plant) includes whatever
Qualifying expenditure is capital expenditure on items of plant and machinery, this includes expenditure on the alteration of land for the purpose only of installing plant or machinery.
Expenditure which does not qualify for allowances
Expenditure on buildings, structures and land, as well as expenditure on certain assets which are incorporated into buildings do not qualify for capital allowances.
The general rule is that qualifying expenditure is - expenditure on the provision of plant or machinery wholly or partly for the purposes of a qualifying activity that the person incurring the expenditure carries on, and the person incurring the expenditure owns the plant or machinery as a result of incurring the expenditure CA23010.
However, plant is more difficult to define. Because the meaning of plant can be broad, CAA 2001 generally seeks to clarify what cannot be plant. Sections 21 and 22 make clear that a ‘building’ or fixed ‘structure’ cannot be plant. However, there is a long list of exemptions set out in section 23. The items listed are not ‘buildings’ or ‘structures’, so could be plant, but are not automatically designated as such. Otherwise, plant is defined by a nineteenth century case about a horse, which the courts still routinely refer to with approval. This defines ‘plant’, in essence, as ‘apparatus’ used by a business (Yarmouth v France (1887) LR 19 QBD 647). Since there is no statutory definition of plant guidance about the meaning of plant has to be found in case law. The cases about the meaning of plant go back a long way. The first case in which the meaning of plant was considered was Yarmouth v France (1887) 19QBD647. It was not a tax case but was a case under the Employer's Liability Act 1880. In that case Lindley LJ said that:
In its ordinary sense it (that is, plant) includes whatever