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HMRC internal manual

Capital Allowances Manual

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


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 CA23730. This means that you do not need to reconsider the life of the asset once it has been determined that it is long-life. Treat expenditure on a second hand asset as expenditure on a long-life asset if the asset has been a long-life asset in the hands of a previous owner. Include expenditure on a second hand long-life asset in the overall expenditure in deciding whether the monetary limit has been exceeded. Where the limit has not been exceeded, the long-life asset rules apply only to the expenditure on the second hand asset.

Example In the year ended 31 December 2010 Jackson buys a new printer with an expected life of 30 years for £40,000 and a binder from Lowell for £50,000. The binder was treated as a long- life asset when Lowell owned it. Jackson’s total expenditure is £90,000, which is less than the monetary limit. The printer is not treated as a long-life asset because Jackson’s total expenditure is less than the monetary limit, but the binder is treated as a long-life asset as it was treated as one in Lowell’s hands. If the printer had cost Jackson £60,000, it would also have been treated as a long-life asset as Jackson’s total expenditure of £110,000 would then have exceeded the monetary limit.

You should only expect the taxpayer to establish whether a second-hand asset was treated as long-life in the hands of the previous claimant where:

  • the asset is of a type that is clearly likely to have been treated as long-life, or
  • it is reasonable to expect that the information will be readily available to the taxpayer, for instance on a sale between connected persons, the sale of a business as a going concern or a sale and leaseback.


You should similarly accept that a second-hand asset is not long-life if we have accepted for the previous claimant, after consideration of the facts, that the asset was not long-life.

The seller need not have claimed allowances before the asset is sold but strictly the buyer cannot claim the non long-life asset rate until the seller has made a return in which allowances are claimed by including expenditure on the provision of the asset in his qualifying expenditure.

Where it appears that CAA01/S103 will apply to the buyer of a long-life asset you should let the buyer claim allowances at the main rate on a provisional basis provided that both the following conditions are satisfied.

  • the buyer has taken reasonable steps to establish that Section 103 will be satisfied, and
  • the buyer will make any revisions to returns and accept any assessments needed to withdraw any excess allowances claimed if it turns out that Section 103 is not satisfied.


Apply the long-life asset legislation to a second-hand asset brought into the UK from abroad if it was reasonable to expect that the asset would have a useful economic life of at least 25 years when it was new. This applies even if the remaining life when it is imported is less than 25 years.

Transitional provisions

Where the original expenditure on the asset was incurred before 26 November 1996 or before 1 January 2001 under a contract entered into before 26 November 1996 any subsequent expenditure on buying the asset is excluded from being long-life asset expenditure no matter how often the asset changes hands provided that each owner has claimed allowances at the main rate. If, however, it passes through the hands of a person exempt from tax, for example, the exclusion ends and the asset will only be excluded from long-life asset treatment if its expected life when new is less than 25 years.

FA 2011 reduced the rate of the main rate pool from 20% to 18% from 1 April 2012 for CT and 6 April 2012 for IT