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HMRC internal manual

Employment Income Manual

Deductions from earnings: capital allowances: meaning of

Section 36(1)(b) CAA 2001If an employee purchases an item of machinery or plant as a matter of choice simply because he or she wishes to go about their job in a particular way, it will not have been ‘necessarily provided’ for the purpose of Section 36(1)(b) CAA 2001.

In White v Higginbottom (57TC283) a clergyman claimed capital allowances on the cost of a slide projector which he used in giving audio visual sermons. The General Commissioners found as a fact that another vicar could perform the functions of religious ministry without the equipment concerned. In the High Court Vinelott J considered this finding of fact conclusive. Commenting on the objective nature of the test he said at page 289:
The purpose of proviso (i) to Section 47(1) must I think have been to impose the same test as that applicable to revenue expenditure ….. It is to my mind impossible to suppose that the legislature intended that there should be a different test and that capital expenditure on the provision of equipment for use in the performance of the duties of an office or employment should be allowable although the revenue cost of maintaining it might not be’.
However you should take care when applying this reasoning to situations where the employee’s duties are only vaguely defined. This is particularly so when the equipment purchased represents a more up to date method of carrying out existing tasks which are a necessary part of the duties. In that case, the employee can exercise some element of choice in deciding how to go about those tasks without foregoing the entitlement to allowances; in the same way that an employee who undertakes necessary travel in the performance of the duties may choose whether to travel by car or by train.

As regards:
* word processors and computers, see EIM36730 * particular types of employment, see Table 4 in EIM36500.