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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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General: Contributions: Contributions towards expenditure on plant and machinery

CAA01/S538

A person who makes a contribution towards another person’s expenditure on plant and machinery can claim PMA on the contribution if:

  • the general conditions for a contributions allowance are satisfied CA14400, and
  • the person makes the contribution for the purposes of a qualifying activity for PMA they carry on. The allowances on the contribution are calculated separately. This is done by putting the contribution into a separate pool.

 

If the whole of the contributor’s trade etc. is transferred make WDAs for chargeable periods ending after the transfer to the transferee not the contributor.

If part of the contributor’s trade etc. is transferred make WDAs for chargeable period sending after the transfer to the transferee to the extent that they are attributable to the part transferred.

Example David operates two shops as a single trade. He makes a contribution for the purposes of his trade towards Stephen’s expenditure. David is entitled to PMAs on the contribution and allocates the qualifying expenditure to a pool.If David transfers the whole of his trade to Graham, Graham gets PMAs on the contribution for chargeable periods ending after the transfer. If David transfers one shop to Graham but keeps the other and the contribution was made for the purposes of the shop which David keeps, David keeps on getting PMAs on the contribution after the transfer. If the contribution was made for the purposes of the shop transferred to Graham, Graham gets PMAs on the contribution after the transfer. If the contribution was made for the purposes of David’s trade as a whole split the pool for the contribution and transfer part to Graham.