Definition of plant and machinery

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Definition of plant and machinery
  • Legislative definition of plant and machinery
  • Integral features
  • Buildings
  • Structures and land
  • Override
  • Case law definition of plant and machinery
  • Two-year test
  • Function test
  • Premises test
  • Completeness test
  • ‘Entity’ or ‘piecemeal’ approach to expenditure

This document discusses the definitions of integral features, building, structures and land, overriding exceptions. It also covers case law definition of plant and machinery, two-year test, function test and others.


Legislative definition of plant and machinery

The general rule allowing capital allowances on plant and machinery is given at CAA 2001, s 11. There is no statutory definition of ‘plant and machinery’ so there is a heavy reliance on case law.

However, CAA 2001, ss 21–23 include lists of common items which are treated as plant. Before considering case law, you should check whether the item is specified as eligible for plant and machinery allowances in these sections or not.

The flowchart below illustrates how the legislation then determines whether plant and machinery qualifies for allowances:

CAA 2001, ss 11, 21–23, 33A

Integral features

The definition of plant has proved a significantly problematic area for the courts. Where capital expenditure has become integrated into premises, it has been difficult to determine whether plant and machinery allowances are available.

The relatively new category of ‘integral features’ helps simplify expenditure in this grey area by specifying that certain capital costs are plant and machinery.

Integral features are a special category of plant and machinery defined by statute. This means that they are an exception to the general rule of CAA 2001, s 11 in that expenditure must be plant or machinery as determined by case law. Instead, CAA 2001, s 33A(2) provides that integral features are treated as plant which is used for the purposes of the qualifying activity.

For compliance, this simplifies many considerations. Some items which have proved contentious are now put beyond doubt.

Integral features are listed as:

  • an electrical system (including a lighting system)
  • a cold water system
  • a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor

More on Capital allowances: