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HMRC internal manual

Capital Allowances Manual

HM Revenue & Customs
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Plant & Machinery Allowances (PMA): Long-life assets: Outline

Long-life assets qualify for a lower rate of writing-down allowances than most other plant and machinery. Prior to FA 2008 there was a separate pool - the long-life assets pool - that contained all the expenditure on long-life assets CA23760. WDAs were given at an annual rate of 6% on the reducing balance basis on the expenditure in that pool. There was not a balancing adjustment when the last long-life asset is disposed of. Balancing adjustments only arose if the qualifying activity was permanently discontinued. A SLA election CA23640 may not be made for long-life assets.

The long-life assets legislation was introduced in FA97. It does not apply to expenditure incurred before 26 November 1996 or to expenditure incurred before 1 January 2001 under a contract entered into before 26 November 1996. That expenditure qualifies for WDAs at the normal rate. Some assets are excluded from long-life assets treatment CA23730. There is a monetary limit. If the total expenditure on long-life assets in a chargeable period is less than the limit the long-life assets legislation does not apply CA23740. Once an asset has been treated as a long-life asset it continues to be treated as one even if its ownership changes except where the use by the new owner comes within the exclusions CA23750.

Legislation was introduced in FA 2008 to reduce the main rate of writing down allowances for new and unrelieved expenditure on general plant and machinery allocated to a pool from 25% to 20%. At the same time the legislation increased the rate of writing down allowances on long-life assets from 6% to the rate for the special rate pool (which at that time was 10%). FA 2011 reduced the rate of the special rate pool to 8% from 1 April 2012 for CT and 6 April 2012 for IT. Any unrelieved expenditure in the long-life asset class pool was, for chargeable periods starting on or after 1 April 2008 (for businesses within the charge to corporation tax) or ending on or after 6 April 2008 (for businesses within the charge to income tax) allocated to the special rate pool. Long-life asset pools ceased to exist for all accounting periods starting on or after 1/6 April 2008. The legislation also had effect for the calculation of writing down allowances for chargeable periods ending on or after 1/6 April 2008.