Plant and machinery: allowances on fixtures when there's a change of ownership

Capital allowances you can claim on plant and machinery when you buy a building with fixtures.

Sales after April 2014

Sales after 1 April 2014 for Corporation Tax or 6 April 2014 for Income Tax

The buyer of a building that contains fixtures, can only claim plant and machinery allowances (PMA) if the expenditure on the fixtures is pooled before the sale.

The seller and buyer must also either:

  • formally agree a value for fixtures within 2 years of a transfer
  • start formal proceedings to agree the value within that time

Sales from April 2012 to April 2014

1 April 2012 to 31 March 2014 for Corporation Tax and 6 April 2012 to 5 April 2014 for Income Tax

The seller didn’t need to pool the expenditure but needed to agree the value with the buyer.

This is known as the fixed value requirement. It only applies where the past owner is required to bring in a disposal value for the fixtures when the property is sold.

The value of the fixtures can be fixed by:

If the fixed value requirement isn’t satisfied because you haven’t made an election or applied to a tribunal, the current owners (the buyer’s) qualifying expenditure is counted as nil. In these cases the buyer or any future buyer won’t be able to claim PMA on the fixtures.

The past owner (the seller) must still bring in a disposal value.


In most cases, you’ll satisfy the fixed value requirement when the current owner and past owner make an election.

A receiver can’t make an election on behalf of either the buyer or the seller.

You should use the election procedure to make an election in writing to HM Revenue and Customs (HMRC),

It must contain:

  • the amount fixed by the election
  • the name of each person making the election
  • enough information to identify the fixture and the relevant land
  • details of the interest gained by (or the lease granted to) the buyer
  • the tax district references of each person making the election

The election is permanent and cannot be changed after it has been made.

Time limits

You can make the election up to 2 years after the buyer bought the property or is granted the lease.

You must include a copy of the election with each person’s tax return for the first period that’s affected by it. This will normally be the period in which the disposal or purchase takes place.

When a partnership makes an election, the election must accompany the partnership tax return.

You must state the amount allocated to the fixture when you make the election.

The fixtures rules work on an asset-by-asset basis. Although grouping assets together may be allowed (as long as it doesn’t distort the calculation) you must show fixtures that:

  • are integral features and qualify for writing down allowances (WDA) at the 8% rate in the special rate pool
  • qualify for WDA at the 18% rate in the main plant and machinery pool

Application to tribunal

If the current and past owner can’t agree an apportionment, either can apply to the first-tier tribunal to decide the value of the fixture. You must make the application before the end of the relevant 2 year period. You’ll satisfy the fixed value requirement when the tribunal decides the value.

If you applied to the tribunal in time, an election may still be made even though the normal time limit has passed and:

  • it hasn’t been determined or withdrawn
  • the current owner and past owner haven’t reach an agreement

Preservation of allowances

There are special rules that preserve allowances. One of which is the intervening owner can’t claim PMA for the fixture.

For example, Adam sells a building to a charity in 2015 then the charity sells the building to Ben in 2018. Here the charity is the intervening owner between Adam and Ben.

The charity can’t claim PMA for capital expenditure they incurred on the fixtures. But Adam and the charity can make an election agreeing the apportionment (or apply to the tribunal to decide the value).

When the charity sells the building these documents can be passed to the new owner, Ben. This will satisfy the fixed value requirement and pass on the entitlement to PMA to Ben.

But the intervening owner, the charity, doesn’t consider making a joint election with Adam.

To avoid losing allowances in these circumstances, Ben can satisfy the fixed value requirement if he gets both a written statement:

  • from the charity (intervening owner) stating that an election was not made and can no longer be made
  • made by Adam showing the disposal value that he brought in

Changes in ownership of fixtures: disposal value statements

In some cases, you might need a disposal value statement rather than using the fixed value requirement.

This could be when a person permanently stops a qualifying activity, but there’s no immediate change of ownership of the fixture.

In this case, the past owner must bring in a disposal value for the fixture in their final tax return, without having sold the property. If the past owner then sells the property some years later, they’ll be too late to enter into an election with the buyer. This would mean they couldn’t fix the apportionment of the expenditure relating to fixtures.

Here the current owner must get a written statement from the past owner. This must detail disposal value they were required to bring into account. This statement must be made by the last owner within 2 years of the date they disposed of the property.

Evidence you need to support a claim for plant and machinery allowances on fixtures

The current owner must show whether the fixed value requirement or, if appropriate, the disposal value statement requirement applies.

If the current owner can’t give evidence of meeting these requirements to HMRC, their entitlement to PMA on fixtures acquired from a past owner will be nil.

The current owner must be able to give either a:

  • copy of the election
  • tribunal decision
  • written statement

These documents will also prove that they’ve met the pooling requirement. This is because they can only show expenditure relating to fixtures that have been pooled.

Published 4 December 2014