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HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): introduction: employment or office - the ‘necessarily’ condition

CAA01/S20 & CAA01/S36

Where the qualifying activity is an office or employment, there is an additional condition that must be satisfied for expenditure on the provision of an asset (other than a motor car) to qualify for PMA. The asset must be necessarily provided for use in the office or employment.

The CA legislation about employments does not apply to divers and dive supervisors in the North Sea.

Expenditure incurred by an employee on a motorcar or other vehicle qualifies for PMAs up to and including 2001/02. The necessarily condition did not apply to motorcars. If a motorcar was provided partly for use in the office or employment and partly for private use, PMAs were restricted in proportion to the qualifying use. Up to 2001/02, an employee or office holder who bought a car, other road vehicle or a cycle had the choice of claiming capital allowances or taking part in the Fixed Car Profit Scheme. There are special rules for calculating a balancing allowance where an employee has taken part in the Fixed Car Profit scheme for some chargeable periods and claimed PMAs for others CA23550.

Expenditure by employees on motorcars does not qualify for PMA from 2002/03 onwards. From 2002/03 an employee is entitled to claim statutory authorised mileage relief in respect of qualifying business travel and so they cannot claim PMAs.