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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Deductions from earnings: capital allowances: calculating the allowances due: first year allowances: withdrawal of 100% first year allowance for items acquired for use primarily in Northern Ireland

Section 43 CAA 2001

A 100 per cent first year allowance was available for plant and machinery acquired between 12 May 1998 and 11 May 2002 (both dates inclusive) for use primarily in Northern Ireland (see EIM36630). The 100 per cent allowance is withdrawn if, at any time within two years from the date when it was purchased:

  • the plant or machinery belongs to the person who bought it, or to somebody connected with that person (using the definition of ‘connected persons’ in Section 839 ICTA 1988, see CG14532)

and either

  • the primary use to which it is put is a use outside Northern Ireland


  • it is held for use otherwise than primarily in Northern Ireland.

The sort of case where you are most likely to have to consider withdrawing the 100 percent first year allowance is where, within two years of buying an item of plant or machinery, a Northern Ireland employee

  • moves away from Northern Ireland, taking the plant or machinery with them, or
  • sells the plant or machinery to a ‘connected person’ outside Northern Ireland.

In cases where the 100 per cent first year allowance has to be withdrawn:

  • the taxpayer can claim instead the appropriate ‘elsewhere’ rate of first year allowance shown in the table in EIM36630, or a writing down allowance (see EIM36650 onwards)
  • the legislation allows you to make any assessments, or adjustments of assessments, which may be necessary to give effect to the reduced capital allowances for the year in which the first year allowance was originally claimed.