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HMRC internal manual

Capital Allowances Manual

Plant and Machinery Allowances (PMA): buildings and structures: expenditure on integral features: AIA, short-life asset treatment and so on

CAA01/S33A, S33B; FA08/

Short-life asset treatment

A person may not make a short-life asset (CA23600) election in respect of integral feature expenditure. The facility to elect for short-life asset treatment for any type of special rate expenditure is ruled out by S84 CAA01. (This consequential amendment to S.84 was effected by FA08/Sch 26, Para 7.) So the exclusion that previously applied to, for example, expenditure on long-life assets, now also applies to expenditure on the provision or replacement of integral features.

Annual Investment Allowance (AIA)

A person may, however, claim AIA on special rate expenditure CA23084, including on his or her expenditure on integral features. In general, businesses are free to allocate their AIA to AIA qualifying expenditure in any way they see fit. They are therefore free to set their AIA against expenditure qualifying for the lower special rate of WDA, before using any balance against their main rate, 20% P&M expenditure. (The rates of the main pool and special rate pool are reduced from 20% to 18% (main rate) and from 10% to 8% (special rate) respectively from 1 April 2012 (CT) and 6 April 2012 (IT).)

In this way, the AIA may act as a sort of *de minimis *provision, allowing modest amounts of annual expenditure on integral features to be completely covered by the new 100% allowance. This is likely to be of particular assistance to smaller businesses and may relieve some businesses from the need to make annual special rate pool calculations.