Entitlement to plant and machinery allowances

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

General rule

The general rule is that capital allowances are available for ‘qualifying expenditure’ incurred by a person carrying on a ‘qualifying activity’. ‘Person’ includes both companies and individuals.

Qualifying expenditure for capital allowances

‘Qualifying expenditure’ is capital expenditure incurred on plant or machinery that is wholly or partly used in the qualifying activity carried on by the person incurring the expenditure. The person incurring the expenditure must also own the asset as a result of incurring the cost of it. Details of what constitutes a qualifying activity can be found in the Capital allowances ― introduction guidance note.

Subsidies

Expenditure which is covered by a subsidy is not qualifying expenditure. However, subsidies made by private entities will be qualifying expenditure where the donor cannot claim capital allowances on the expenditure. See ‘Contributions to expenditure’ below.

Gifts

Qualifying expenditure includes deemed expenditure on plant or machinery which has been received as a gift. The recipient is treated as having incurred expenditure equivalent to the market value of the plant or machinery on the date

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