HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): introduction: outline

Depreciation of fixed assets charged in the accounts is not allowed as a deduction in computing taxable profits. Capital allowances may be given instead. Plant and machinery allowances give relief at prescribed rates for the depreciation of fixed assets that are plant or machinery.

In order to qualify for PMAs, a person must:

  • be carrying on a qualifying activity CA20010, and
  • incur qualifying expenditure (CAA01/S11). Qualifying expenditure is capital expenditure on the provision of plant or machinery CA21000 wholly or partly for the purposes of the qualifying activity (CA20010). Normally the person must own the asset as a result of incurring the expenditure.

The range of qualifying activities for PMA is very wide. It broadly covers all taxable activities other than passive investment, including a trade, profession, vocation, office, employment and an ordinary property business.

The range of assets that qualify as plant and machinery is also very wide. Broadly it covers all fixed assets used in the business other than intangible assets apart from computer software, land and buildings. The main difficulty in determining whether an asset qualifies as plant or machinery comes with assets incorporated into buildings.

Normally, the taxpayer must also own the plant or machinery as a result of incurring the expenditure. There are exceptions to this condition, however, in particular for fixtures CA26000.

There are three main types of PMA: Annual investment allowance (AIA); other first year allowances (FYAs) and writing down allowances (WDAs).

AIA is effectively a 100% allowance for business expenditure on plant and machinery (apart from cars). It is available in the year in which the expenditure is incurred. The AIA applies to businesses regardless of size. The current and past AIA thresholds and the date ranges for which they apply can be found at For further information about the AIA, see CA23081+.

FYAs are only due in certain circumstances. It is a special allowance given at a higher rate than the normal WDA for the chargeable period in which the expenditure is incurred. Any expenditure left unrelieved qualifies for WDAs for subsequent periods.

WDAs are calculated using the pool basis. A pool may cover a single asset or a class of assets. Pooling works by keeping a running total of the unrelieved expenditure on the assets in the pool. WDA is given on the current total. This is known as the reducing balance basis.


Bennett & Darcy Ltd runs a transport business. It draws up accounts to 31 December each year. Its pool of expenditure at 31 December 2017 is £32,000. In the year ended 31 December 2018 it buys seven new FYA qualifying zero emission lorries for £100,000 each, plus a second hand zero emission lorry (not FYA qualifying) for £50,000. The AIA threshold for the period is £200,000. It also sells a lorry for £4,000 in that year. This is an example of a possible CA computation for the year ended 31 December 2018:

  • Cost of new zero emission lorries (£700,000)
  • FYA at  100% = £700,000
  • Cost of second hand lorry (£50,000)
  • AIA claimed £50,000
  • Pool brought forward £32,000 - disposal (£4,000) = £28,000 available for WDA
  • WDA at 18% = £5,040
  • Pool carried forward = £28,000 - £5,040 = £22,960 

The pool brought forward at 1 January 2019 is £22,960

Different types of pools

There are single asset pools, class pools and the main pool.

Main pool

The main pool contains all expenditure that does not go into a single asset or class pool.

Single asset pools

Expenditure on some assets is kept separate from expenditure on all other assets and does not go into the main pool. It is dealt with in single asset pools. These include assets used partly for purposes other than the qualifying activity, short life assets and cars costing more than £12,000 (but only where the expenditure was incurred before 1/6 April 2009).

Class pools

There are two class pools; one for special rate expenditure and one for expenditure on plant & machinery for overseas leasing. Certain expenditure must be allocated to the special rate pool and will attract WDAs at the ‘special rate’, which is lower than the main rate (details of the current main and special rates can be found on Special rate expenditure includes expenditure on thermal insulation, integral features, long life assets and cars with higher CO2 emissions (see

Where a person carries on more than one qualifying activity, PMAs are calculated separately for each activity with a separate pool or pools for each of them.