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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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Plant and machinery allowance (PMA): First Year Allowance (FYA): expenditure on zero emission goods vehicles: cap on qualifying expenditure for undertakings


There is a limit on the amount of expenditure that qualifies for the relief, which has been set at €85 million per undertaking CA23145 over the five year life of the scheme. Once that amount has been exceeded, the undertaking is not eligible to claim any further relief under the scheme. In practice because of the high limit it is considered unlikely that any undertakings will exceed this amount.

Expenditure incurred in a currency other than the euro should be converted into euros using the spot rate of exchange for the day on which the expenditure is incurred.

How the expenditure should be calculated

Qualifying expenditure should be calculated by taking into account the type of enterprise the undertaking is, is part of, or has been part of, over the five year period of the scheme.

For example, a person claiming the relief could have started off as an autonomous enterprise, become part of a linked or partner enterprise, and then become autonomous again. In such a case that person’s qualifying expenditure must take into account the expenditure incurred whilst an autonomous enterprise and as part of the linked or partner enterprise. The undertaking that person was part of is also required to take into account the expenditure incurred by that person, whilst part of that undertaking and after that person left. This can be illustrated by the following examples:

(i) Autonomous enterprises

Example 1: A has no relationship with any other ‘enterprise’ and is therefore autonomous. In Year One it spends €2 million on zero-emission goods vehicles. This means that it still has €83 million available to spend on zero-emission vehicles for the remaining four years of the scheme.

(ii) Linked enterprises

Example 2: A was an autonomous enterprise. It becomes part of a linked enterprise, B, in Year 2. When this occurred A, had already incurred €2 million on qualifying vehicles in Year 1 and B, to which A is now linked, had incurred €25 million. For the purpose of the cap, the two amounts of €2 million and €25 million are added together and the expanded linked enterprise B is deemed to have incurred €27 million on qualifying vehicles.

Example 3: the C group of companies is a linked enterprise. C sells one of its subsidiaries, X, to another linked enterprise, the D group of companies. While X was part of C €20m had been incurred on qualifying vehicles. D had incurred expenditure of €15m on qualifying vehicles before acquiring X.

The €20m expenditure incurred within C, whilst X was a part, should be added to D’s existing total of €15m so that D’s future qualifying expenditure cannot exceed €50m (€85m less €35m). Despite the disposal of X, C is still deemed to have incurred €20m on qualifying vehicles.

(iii) Partnership enterprises

Example 4: Partner enterprise M, is made up of P, Q, R and S. P and Q have each incurred €2,500,000 expenditure on zero-emission goods vehicles. Therefore, partnership M and all its members have incurred €5,000,000 on zero-emission vans.

Example 5: A is a member of three separate partnership enterprises X, Y and Z. If A purchases a zero-emission goods vehicles for its own use, the expenditure of those vehicles count towards the calculation for each of those individual partnerships of which A is a member.

Where an person A is part of a partner enterprise and other partner members within that enterprise are part of other partner enterprises, A should only include the expenditure of the partner enterprises that is directly associated with it.

Whilst a person should only include the expenditure of the partner enterprise that is directly associated with it, if a linked enterprise is partnered to it then total expenditure incurred by that linked enterprise must be taken into account.