CA23730 | Plant & Machinery Allowances (PMA): Long-life assets: Exclusions

CAA01/S93 - S96

Long-life asset treatment does not apply to expenditure:

• on the provision of plant or machinery which is a fixture in, or is provided for use in, a building used wholly or mainly as*, or for purposes ancillary to the purposes of, a dwelling house, retail shop, showroom, hotel or office.**

• incurred before 1 January 2011 on the provision of ships of a sea-going kind other than ones which are of a type primarily used for sport or recreation; or are offshore installations.***

• incurred before 1 January 2011 on the provision of railway assets for use wholly and exclusively in a railway business.****

• on the provision of cars as defined in CAA01/S268A CA23510.

* Accept that a building is used 'wholly or mainly' for the relevant purpose if at least 75% of the building measured on a reasonable basis, for instance by cost or floor area, is used for that purpose.

** Note that fixtures that are ‘integral features’ will be special rate assets under the integral features provisions. See CA22300. Also note that plant or machinery for use in a dwelling house may be excluded from plant and machinery allowances. See CA23060.

***The definition of ships that are excluded from long-life asset treatment is broadly the same as the definition of qualifying ships for the deferment of balancing charge provisions CA25350 except that there is no registration or weight requirement.

**** The definition of a railway includes a tramway or other system of guided transport. Railway assets are locomotives, rolling stock, tracks, stations, light maintenance depots, signalling equipment, power supplies and other associated apparatus. A railway business is a business or the part of a business that provides a public service of transporting goods or passengers by means of a railway in the UK or the Channel Tunnel. Expenditure on the provision of a railway asset for use (whether by the owner or by a lessee) wholly and exclusively for the purposes of a railway business is excluded from long-life asset treatment. Expenditure which involves a benefit to a non-railway business may satisfy the wholly and exclusively condition if the benefit is incidental (see BIM42135), for instance an electricity generator to supply power to a railway system which also incidentally supplies power to shops on railway stations. Parts of a station which are intended to be used to a material extent for other purposes are likely to fail the wholly and exclusively condition but may come within the shops and offices exclusion instead.