Qualifying Activities for Claiming Plant and Machinery Allowances

In a separate article, we noted that persons engaged in qualifying activities can claim Plant and Machinery Allowance (PMA) on expenditure they incur for providing plant or machinery for carrying on the qualifying activity. In this article, we look at what are included under qualifying activities.

CA20010 lists qualifying activities for claiming PMA:

• Trade;
• An ordinary property business;
• Furnished holiday letting business;
• Overseas property business;
• Profession or vocation;
• Mine, quarry or canal or other concern giving rise to profits from land charged to tax as a trade under ITTOIA/S12 (4) or under case I Schedule D in accordance with ICTA88/S55;
• Management of an investment company;
• Special leasing business;
• Employment or office.

To qualify for PMA under the last item above, employment or office, the asset must be “necessarily” provided for use in the office or employment. Expenditure incurred by employees on motor cars or other vehicles does not qualify for PMA from 2002/03 onwards. The rule now is that employees can claim statutory authorized mileage relief for qualifying business travel and not PMA on the vehicle.

Expenditure incurred for the provision of plant and machinery in a building used as a dwelling house does not qualify for PMA. A block of flats, however, is not a dwelling house as such; but the individual flats are. Expenditure that can be apportioned as intended for the common areas of the block are eligible for PMA claims.

Though dwelling houses are not eligible for PMA, property used for commercial letting of furnished holiday accommodation in the UK & EEA is eligible. To qualify, however, the property must:

• Have been available for commercial letting for at least 140 days during the year,
• Have been actually let to members of the public for at least 70 days and
• Not have been let to the same occupant continuously for more than 31 days except under abnormal conditions.

These letting conditions are due to increase from April 2012.

We will look at the details of other qualifying activities in a separate article.

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