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HMRC internal manual

Capital Allowances Manual

General: Contributions: Allowances on contribution: general conditions


A person who has made a capital contribution towards expenditure on the provision of an asset can claim capital allowances on the contribution if:

  • the recipient would have been treated as incurring the expenditure,
  • the recipient would have been able to claim PMA, IBA, ABA or MEA or the recipient is a public body, and
  • the contributor and the recipient are not connected.

A public body is the Crown or any government or public or local authority wherever it is based.

Example Johnny runs a restaurant. June has a market garden where she grows herbs that Johnny uses in the restaurant. June buys new equipment for the market garden and Johnny makes a contribution towards her costs. Johnny’s contribution is deducted from June’s expenditure qualifying for PMA -CA14100 -and Johnny can claim PMA on the contribution.

But if Johnny and June are married Johnny cannot claim capital allowances on his contribution because they are connected persons. However June can then claim capital allowances on all of her expenditure - the contribution is within the exception for contributions by someone other than a public body who cannot get relief for it - CA14200.

A person who makes a capital contribution towards another person’s dredging expenditure istreated as incurring capital expenditure on dredging.