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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
Updated
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PMA: Partnerships and successions: Partnership using the property of a partner

CAA01/S264

Sometimes a partnership that carries on a qualifying activity uses an asset in the qualifying activity that belongs to one of the partners and is not partnership property.

When this happens it is the partnership and not the partner that can claim PMAs.

This does not apply if:

  • the partner who owns the plant lets it to the partnership, or
  • the partnership pays the partner for the use of the plant and the payment is deductible in computing the partnership profits.

 

If the partner who owns the plant sells or gives it to another partner and the partnership continues to use it after the sale or gift, the sale or gift is ignored for PMA purposes.

Example Lily, Rosemary and Jack are in partnership. They run a casino and use a roulette wheel that belongs to Jack in the casino but do not make any payment to Jack for using it.

The partnership of Lily, Rosemary and Jack can claim PMAs on the roulette wheel.

If Jack sells the roulette wheel to Lily but the partnership continues to use it free of charge the partnership can continue to claim PMAs on the roulette wheel.

If Jack rents the roulette wheel to the partnership the partnership cannot claim PMAs although Jack will be able to claim PMAs either in a leasing business or a special leasing business.