B3.305 Qualifying expenditure for plant and machinery allowances—general
As stated in B3.303, the general rule is that expenditure qualifies for plant and machinery allowances (ie it is 'qualifying expenditure') if:
• it is capital expenditure on the provision of plant or machinery wholly or partly for the purposes of the qualifying activity carried on by the person incurring the expenditure, and
• the person incurring the expenditure owns the plant or machinery as a result of incurring it1
The general rule is affected by the other provisions of the legislation, particularly those described in B3.308–B3.311.
It should be noted that capital allowances may be denied in circumstances where, looking at the matter as a whole, the purpose of the expenditure is not the acquisition of plant and machinery, but the obtaining of capital allowances under a transaction that has no commercial reality; see B3.303.
Allowances are given on the expenditure exclusive of VAT except in the case of a business which is partly exempt or not registered for VAT (see B3.103).
The provisions apply to a part of any plant or machinery2 and to a share in plant or machinery3. A share in plant or machinery is deemed to be used for the purposes of a qualifying activity so long as, and only so long as, the plant is actually used for those purposes4.
As regards an asset provided partly for the purposes of a qualifying activity and partly for other purposes, and the rules for giving