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HMRC internal manual

Employment Income Manual

Deductions from earnings: capital allowances: calculating the allowances due: writing down allowances: general

Section 58 CAA 2001

Machinery or plant necessarily provided for use in the performance of the duties (see EIM36540) qualifies for a writing down allowance of 20 per cent provided that it belongs to or has belonged to the employee.

But if the expenditure qualifies for:

  • Annual Investment Allowance (AIA) (see EIM36605), writing down allowance can be claimed on the balance of expenditure after AIA has been deducted.
  • A first year allowance (see EIM36610), first year allowance and writing down allowance cannot be claimed on the same expenditure for the same year.

In the simplest case where a qualifying item of plant is bought during the year for £1,000 in a continuing employment, the writing down allowance will be £200 (20% x £1000). The difference of £800 is called the ‘residual value’ and this is the figure on which a writing down allowance of 20 per cent will be calculated for the following year if circumstances remain the same.

For further guidance regarding the amount on which the writing down allowance is calculated, see EIM36660.

The rate of 20 per cent is not reduced where plant is acquired part way through a year of assessment.

But if the employment itself only starts part way through the year, the amount of the writing down allowance is restricted to the proportion of the year the employment is held (see example EIM36915).

An employee may decide not to claim a writing down allowance, or may claim all or part of the allowance due.

See EIM36670 for the adjustments needed where:

  • the office or employment ceases or
  • the plant or machinery is disposed of or ceases to be used in the performance of the employee’s duties.