CA23720 | Plant & Machinery Allowances (PMA): Long-life assets: Meanings and definitions

CAA01/S90 - S91

'Long-life asset expenditure' is expenditure that is incurred on a 'long-life asset' and is not excluded from long-life asset treatment CA23730.

An asset is a 'long-life asset' if it is plant or machinery which

• if new, can reasonably be expected to have a useful economic life of at least 25 years,

• if not new, could reasonably have been expected when new to have a useful economic life of at least 25 years.

'New' means unused and not second hand.

The 25 year test is applied to the asset as a whole and not to its component parts. See CA23721.

The 'useful economic life' is the period beginning when the asset is first brought into use by any person for any purpose and ending when it is no longer likely to be used by anyone for any purpose as a fixed asset of a business. Note that this may be longer than the useful life for accounting purposes as the accounting definition is concerned with the use in a single business, whereas the PMA definition looks at the overall period of use in any business. For guidance on how to determine the useful economic life, see CA23722.