RLB_UK_Riders_Digest_2013

General Plant & Machinery
Plant and machinery is outlined within the Capital Allowances Act 2001
s23 and further clarified by case law (e.g. Fire prevention, security, fixtures
& fittings). Therefore the level of plant and machinery will depend on the
trade carried on by the investor/user and will differ for every property.
Plant and machinery allowances are relieved at 18% per annum on a
written down basis for income or corporation tax payers respectively.
It is important to note that to qualify for P&M allowances, the tax payer
must own the plant, have installed ready for use or already in use in
their trade and have incurred the expenditure on the plant. As such, the
allowances are tapered back where a contribution towards the cost is
received (landlord contribution or grant funding). Equally, allowances may
be available where you contribute towards the cost of qualifying items
used by another in their trade / business.
Also, no allowances are given for plant and machinery or fixtures in
a dwelling (residential property). However, the common parts of a
residential development should qualify for allowances on qualifying
expenditure on common parts (eg lifts). HMRC are currently reviewing
their stance on student accommodation at the time of going to print, with
further clarification to follow.
Integral Features (Special Rate Pool)
The Special Rate Pool was introduced in the Finance Bill 2008. Integral
Features are included within this pool and the following items were
defined under this heading in the Finance act 2008:
cooling or air purification, and any floor or ceiling comprised in such a
system
Integral features are relieved at 8% per annum on a written down basis
for income or corporation tax payers respectively.
Also included within the Special Rate Pool is thermal insulation. Thermal
insulation which is added to existing commercial buildings can also be
relived at 8% per annum on a written down basis.
Enhanced Capital Allowances
Enhanced Capital Allowances (ECAs) legislation has been introduced
to encourage the use of energy-saving plant and machinery, low
carbon dioxide emission cars and natural gas and hydrogen refuelling
infrastructure and water conservation plant and machinery in construction
projects. As a 100% first year allowance, investment in ECA-qualifying
items provides a significantly increased tax saving over the alternative
allowances available on these items. In addition, adoption of ECAqualifying
items may also improve a project’s Building Research
Establishment Environmental Assessment Method (BREEAM) ratings
and contribute towards achieving an improved Energy Performance
Certification rating.
To qualify the item acquired must qualify as plant and machinery and
must satisfy the following:
or water conservation criteria specified by the Carbon Trust
© Rider Levett Bucknall UK 2013
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