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HMRC internal manual

Employment Income Manual

Deductions from earnings: capital allowances: particular items of machinery or plant: 100% first year allowance for computers and hi-tech communications equipment bought between 1 April 2000 and 31 March 2004

Section 45 CAA 2001

The normal first year allowance for plant and machinery is 40% (see EIM36630). However, section 45 CAA 2001 provides for a 100% first year allowance to be given in respect of information and communications technology equipment purchased between 1 April 2000 and 31 March 2004 (both dates inclusive). This applies wherever the equipment is to be used.

The equipment that qualifies for the 100% first year allowance is:

  • computer equipment - comprising computers (ranging from small palmtop organisers to large systems), computer peripherals such as keyboards, printers etc; cabling and other equipment to link computers to each other, or to data networks such as the internet; and dedicated electrical systems for computers
  • high-tech communications technologies - comprising WAP (wireless application protocol) phones, 3rd generation (3G) mobile phones and equipment with similar applications and functionality; and set-top boxes that are connected to televisions and are capable of receiving and transmitting information from and to data networks such as the internet
  • software - comprising software for use with computers or high-tech communication technologies. This covers all computer software, including new software for use on computers bought before 1 April 2000 and the costs of creating new websites.

For more information about the conditions which must be satisfied:

  • for an employee or office holder to obtain capital allowances at all, see EIM36520 onwards and EIM36730
  • to qualify for a first year allowance, see EIM36610