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Capital Allowances |
13 |
through a branch or agency has been clarified by FA 2000 with effect from 21 March 2000.89 Entitlement to the allowance now depends on liability to UK tax. So where only a part of the trade is subject to UK tax only an equivalent part of the allowance may be claimed; to achieve this, the UK part of the trade is treated as a separate trade. Consequential rules have to apply to changes in the amount of UK trade so that there is a reduction in the allowance if the portion of the trade attributable to the UK part declines.90 |
24A.2.1.4 Similar Reliefs |
Equivalent but distinct relief is given under CAA 2001 for expenditure on thermal insulation (section 28), fire safety, provided this is required by a fire authority under Fire Precautions Act 1971, section 5(4) or section 10 (section 29), safety at sports grounds (sections 30–32) and on personal security measures (section 33).91 While these expenditures attract capital allowances they do not give rise to balancing charges. |
24A.2.1.5 Partners |
Where the plant is used by a partnership for a trade carried on by the partnership, allowances will be given to the partners in the usual way. Special provision is made where a partner owns the asset but allows the partnership to use it for its trade. Here, the allowance will be given to the partnership, and any sale or gift by the partner to the partners will be ignored. This provision does not apply where the plant is leased to the partnership for payment.92 |
24A.2.1.6 Qualifying Activities: General |
Plant and Machinery allowances can only apply if the taxpayer is carrying on a qualifying activity.93 Such activities cover not only trades, professions and vocations,94 but also schedule A businesses,95 furnished holiday lettings,96 overseas property businesses,97 mines and similar concerns listed in TA 1988, section 55(2),98 the management of investment companies99 and special leasing arrangements.100 These activities all have their own rules for giving effect to the allowances.101 These activities only qualify to the extent that any profits or gains would be chargeable to UK tax.102 |
24A.2.1.7 Qualifying Activities: Employment |
An employment or office is also a qualifying activity and so an employee or office holder can obtain capital allowances to set against schedule E income in respect of ‘Plant and Machinery |