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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Deductions from earnings: capital allowances: introduction: arrangement of guidance: contents

Section 36 CAA 2001


The general rule for employees’ expenses in Section 336 ITEPA 2003 (see generally EIM31620 onwards) does not specifically prevent a deduction for expenditure on plant and machinery used in performing the duties of an office or employment. But substantial expenditure of this kind will not usually qualify for a deduction under Section 336 because it puts an employee in a position to perform the duties rather than being incurred in their actual performance.

Normally therefore allowances for capital expenditure on machinery and plant should be given (and balancing charges should be made where necessary) under the capital allowances rules in Part 2 of the Capital Allowances Act 2001. Those rules are applied to employees and office holders by Section 15 CAA 2001. For 2000/01 and earlier years, the corresponding provisions are in Part II Chapter I of the Capital Allowances Act 1990.

Do not give deductions for expenditure on acquiring plant and machinery under the general rule for employees’ expenses in Section 336 ITEPA 2003 except in the circumstances described at EIM36510.

The detailed guidance on capital allowances for employees and office holders is arranged as shown in the following tables.

Expenditure qualifying for capital allowances
  1. EIM36510
    Expenditure on small items of plant and machinery
  2. EIM36520
    Conditions to be satisfied if capital allowances are to be given
  3. EIM36530
    Meaning of 'machinery or plant'
  4. EIM36540
    Meaning of 'necessarily provided for use in the performance of the duties'
  5. EIM36550
    In the performance of the duties: the need to establish what the duties require
  6. EIM36560
    Necessarily provided: the need to establish whether the employer would provide the machinery or plant
  7. EIM36570
    Apportionment of allowances where there is both business and private use
  8. EIM36580
    Use of machinery or plant for business entertaining
Calculation of the allowances due
  1. EIM36600
    Cases to be seen by an Inspector
  2. EIM36605
    Annual Investment Allowance: general
  3. EIM36610
    First year allowances: general
  4. EIM36620
    First year allowances: exceptions
  5. EIM36630
    Rates of first year allowance
  6. EIM36640
    Withdrawal of 100% first year allowance in respect of machinery and plant acquired for use primarily in Northern Ireland
  7. EIM36650
    Writing down allowances: general
  8. EIM36660
    Writing down allowances: the amount on which the allowance is calculated
  9. EIM36670
    Balancing allowances and charges: when they arise
  10. EIM36680
    Balancing allowances and charges: how they are calculated
  11. EIM36690
    Balancing allowances and charges: the value to take
  12. EIM36695
    Small Pools Allowance
Particular items of machinery or plant
  1. EIM36700
  2. EIM36710
  3. EIM36720
  4. EIM36730
    Computers and word processors
  5. EIM36731
    100% first year allowance for computers and hi-tech communications equipment bought between 1 April 2000 and 31 March 2004
  6. EIM36810
    Mobile telephones, car telephones and in-car entertainment
  7. EIM36750
    Motor vehicles: general
  8. EIM36800
    Pocket calculators
Particular types of employment
  1. EIM50700
    Car mechanics
  2. EIM60055
  3. EIM64650
    Insurance agents
  4. EIM70705
    Teachers in higher education
  5. EIM70790
    Teachers and academics
  1. EIM36850
    How capital allowances are given, and how balancing charges are taxed
  2. EIM36870
    Claims and appeals
  3. EIM36880
    UK based earnings and earnings charged on remittance
  4. EIM36890
    Set-off of excess capital allowances against other income
  5. EIM36900
    Capital allowances and loan interest relief
  1. EIM36910
    Calculation of first year allowance
  2. EIM36915
    Writing down allowances: restriction of allowance in year employment begins
  3. EIM36925
    Adjustments for private use
  4. EIM36930
    Balancing allowances and charges