Capital allowances: qualifying plant and machinery
This page explains when expenditure on plant and machinery qualifies for capital allowances in a property income case.
What is plant and machinery?
An asset is plant or machinery if it is used for carrying on the business and is not stock in trade, the business premises or part of the business premises. So allowances are not due on the cost of let property. (However some industrial buildings and agricultural buildings qualify for different kinds of capital allowances, see PIM3020.)
What plant or machinery qualifies?
Capital allowances are available for plant or machinery used or provided for use forthe purposes of a rental business. Examples include:
- tools used for maintenance,
- office equipment used in running the rental business,
- fixtures in a let property.
What plant or machinery does not qualify?
Capital allowances are not available for furniture and household equipment provided for use by tenants in residential furnished lettings cases. (But they may be available in furnished holiday lettings - see PIM4100 onwards.)
CAA01/S15 treats a rental business in the same way as a trade for plant and machinery capital allowances purposes, see PIM3050. This means that capital allowances are calculated for a rental business as they are for a trade.
Definition of plant and machinery
You can find detailed guidance on the meaning of ‘plant and machinery’ in CA21000onwards. There is no statutory definition, but CAA01/S21 and CAA01/S22 specifically exclude certain items from being treated as plant and machinery. These items come under the headings of buildings, structures and land.
Furnished lettings - furniture etc.
As well as for plant and machinery used in businesses etc., capital allowances may be available in respect of plant and machinery that is let in the course of a rental business under CAA01/S15. But CAA01/S35 specifically excludes plant and machinery leased for use in a dwelling house. So no capital allowances are available for the furniture, fixtures and fittings, equipment etc. provided for tenants’ use in residential furnished lettings. See PIM3200 for ‘renewals allowance’ or ‘wear and tear allowance’ in such cases, and PIM4100 onwards about furnished holiday lettings.