Owner-Managed Businesses

Entitlement to plant and machinery allowances

Produced by Tolley
  • 20 Dec 2021 09:32

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

  • Entitlement to plant and machinery allowances
  • General rule
  • Qualifying expenditure for capital allowances
  • Subsidies
  • Gifts
  • Ownership for capital allowances
  • Exceptions to the ownership requirement
  • Tenants
  • Contributions to expenditure
  • Long funding leasing
  • More...

Entitlement to plant and machinery allowances

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.


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.


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 the recipient brings it into use for a qualifying activity.

Ownership for capital allowances

Generally, capital allowances will only be available where the person incurring (or deemed to have incurred) the expenditure

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