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HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): buildings and structures: expenditure on integral features: definition and related provisions

CAA01/S33A, S33B and S104A

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Integral features - definition

The rules on integral features apply where a person carrying on a qualifying activity incurs expenditure on the provision or replacement of an integral feature for the purposes of that qualifying activity. Each of the following is an integral feature of a building or structure:

  1. an electrical system (including a lighting system);
  2. a cold water system;
  3. a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system;
  4. a lift, an escalator or a moving walkway;
  5. external solar shading.

Only assets that are on the list are integral features for PMA purposes; if an asset is not one of those included in the list, the integral features rules are not in point.

The rules also specifically clarify that the new definition does not extend to any asset whose principal purpose is to insulate or enclose the interior of a building, or to provide interior walls, floors or ceilings which are intended to remain permanently in place (S23(4) & S33A(6)). So if, for example, a business installs a new permanent false ceiling in its premises, in order to conceal new wiring and service pipes, expenditure on that ceiling would not qualify for PMAs.

On the other hand, if a business installs in its premises a plenum floor or plenum ceiling, the principal purpose of which is to function as an integral part of the heating or air conditioning system (for example, the plenum floor or plenum ceiling may form the fourth side of a duct or channel through which stale air is extracted and treated air is discharged), that expenditure would qualify for PMAs as part of an ‘integral feature’ of the building or structure (CA22070 & CA22080).

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Special rate of WDAs

FA08 introduced a new Chapter 10A to CAA01, which contains the rules governing ‘special rate expenditure’, which must be allocated to the ‘special rate pool’ and in respect of which the person incurring the expenditure may be entitled to WDAs at the ‘special rate’. Expenditure on the provision or replacement of integral features is one type of special rate expenditure (S104A (1) (b)). Other types are expenditure on thermal insulation and expenditure on long-life assets. Current rates of WDAs can be found at ‘Work out your capital allowances’, gov.uk.).  

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Historic rules - expenditure incurred prior to 1/6 April 2008

Prior to the introduction of the ‘integral features’ provisions, electrical systems and cold water systems were generally excluded from PMAs by the buildings and structures exclusions in CAA01/SS21 & 22, subject to an exception, in item 2, List C, CAA01/S23 for:  

‘Electrical systems (including lighting systems) and cold water systems provided mainly - (a) to meet the particular requirements of the qualifying activity, or (b) to serve particular plant or machinery used for the purposes of the qualifying activity’.

In common law, such systems could either be part of the premises and not plant; or plant; or a mixture of premises and plant, depending on the circumstances.

The provisions introduced in 2008 have simplified this issue by treating all of the integral features identified above as if they were plant, so that it is no longer necessary to distinguish between different types of electricity and cold water systems and such like.

Availability of Annual Investment Allowance (AIA)

Businesses can use the AIA to claim expenditure on integral features. If WDAs are claimed they must be claimed at the special rate rather than at the higher main rate.