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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Corporation Tax: management expenses: capital allowances on machinery and plant

CAA01/S18 and CAA01/S253 apply capital allowances provisions on:

  • first year allowances,
  • writing-down allowances,
  • balancing allowances,
  • balancing charges,

to machinery and plant used for the purpose of management of the business of an investment company (or a ‘company with investment business’ for periods starting on or after 1 April 2004).

Where capital allowances are not allowed as a deduction in computing income (for example in the computation of Schedule A or Case I income), the capital allowances should be added to the management expenses for the period.

CAA01/S254 to S256 apply to Life Assurance Companies. Separate instructions on the capital allowances available to Life Assurance companies are given in the Life Assurance Manual.

The amount of any balancing charge is treated as income of the business.

For periods beginning before 1 January 1995, companies needed to make an election to claim the allowances (CA20050). There is guidance at CA23500 onwards on capital allowances relating to motor cars.