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HMRC internal manual

Capital Allowances Manual

PMA: Qualifying expenditure: Annual Investment Allowance (AIA) qualifying expenditure: who can claim

CAA01/S38A and S38B, S51A to S51N

The AIA must be claimed by a ‘qualifying person’ who incurs the qualifying expenditure on or after the relevant commencement date, that is, on or after 1 April 2008 (for CT purposes) or 6 April 2008 (for IT purposes).

‘Qualifying person’ means

  • an individual
  • a partnership of which all the members are individuals and
  • a company


carrying on a qualifying activity (this includes trades, professions, vocations, ordinary property businesses and employments or offices).


An employment or office may be a qualifying activity for capital allowances purposes CA20010. Usually, an employer will provide any necessary equipment (for example a computer) if an employee is expected to work from home, but exceptionally, there may be cases where the employee provides the equipment and can claim an AIA. This is subject to the capital allowances contributions rules CA14100 in cases where the employer in fact meets the expenditure either directly or indirectly, and to the rules about non-qualifying use CA23087.

Trusts and mixed partnerships

The above definition of ‘qualifying person’ does not cover all partnerships. The definition only covers a partnership of which all the members are individuals. This means that a partnership of which a company is a member, for example, is not eligible to claim.

Trusts are in the same situation in that they do not fall within the definition of a qualifying person either.

Both trusts and mixed partnerships were similarly excluded from the definition of a ‘business’ for the purposes of the previous 40% or 50% FYA for SMEs CA23170. Dawn Primarolo MP, who was then Financial Secretary to the Treasury, said in the relevant Standing Committee debate in 1997 that:

“..Incredibly complex rules would be required to bring them in, which would open possible abuses of tax-driven options that the hon. Gentleman would deprecate”.

Similar considerations influenced the decision not to include trusts or mixed partnerships as a ‘qualifying person’ for AIA purposes. One of the main objectives underlying the AIA is the aim of keeping the rules as simple as possible, while safeguarding the AIA from abuse through fragmentation and the artificial creation of multiple allowances. In broad terms, the current rules provide that each business is entitled to one AIA, but in order to guard against fragmentation, ‘related’ businesses that are controlled by the same person must share one AIA. It would have been extremely complex to have devised rules to decide who controls a business held by trustees, or to devise rules about ‘related’ businesses and ‘control’ that would, for example, have encompassed businesses controlled by both individual and corporate partners in a mixed partnership at the same time.