CA23113 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): General exclusions
Section 46 CAA01
FYA is not available for the following:
- expenditure incurred in the chargeable period in which the qualifying activity is discontinued
- expenditure incurred on the provision of a car, unless it is a qualifying electric car or qualifying car with zero CO2 emissions (CA23153)
- expenditure excluded from long life asset treatment by the transitional provisions in CAA01/Schedule 3, Paragraph 20
- expenditure incurred on the provision of plant or machinery for leasing other than in specific cases (see below for further details)
- an asset received as a gift
- an asset brought into use for the purposes of a qualifying activity having been acquired for something else, including leasing under a long funding lease
- an asset provided in connection with a change in the nature or conduct of a business carried on by someone else and the main benefit, or one of the main benefits, that could reasonably be expected from the change is obtaining an FYA (this is anti-avoidance legislation).
Exclusion of expenditure on plant or machinery provided for leasing
The leasing exclusion applies whether the leasing is in the course of a qualifying activity or otherwise, so activities like special leasing are caught. That means that assets in properties let out by the taxpayer are excluded from FYAs. Treat letting a ship on charter or any other asset on hire as leasing. The leasing exclusion also applies to software acquired for licensing or sub-licensing. It does not apply where a person lets another person use software without granting a licence or sub-licence. For example, it does not apply where a person lets another person use software that does no more than allow access to the internet, order goods, or view advertising. In a case like that no rights have been granted and there is no licence or sub-licence.
There is a distinction between the leasing or hiring of an asset and the provision of services that involve the use of an asset CA23115.
The leasing exclusion doesn’t apply for the purposes of the 40% FYA in certain circumstances – see CA23195 onwards.
The leasing exclusion also doesn’t apply for an excluded lease of background plant or machinery (CA23835) for the following FYAs: