C1C5C4C3C9C10C11C12C13C15Part 2 Plant and machinery allowances
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)
Chapter 9 Short-life assets
83 Meaning of “short-life asset”
Plant or machinery in respect of which qualifying expenditure has been incurred is a short-life asset if—
a
its treatment as a short-life asset is not ruled out by section 84, and
b
the person incurring the expenditure elects for the plant or machinery to be treated as a short-life asset.
84 Cases in which short-life asset treatment is ruled out
Treatment of plant or machinery as a short-life asset is ruled out in any of the cases listed in column 1 of the Table, unless an exception listed in column 2 applies.
Short-life asset treatment
1. Short-life asset treatment ruled out | 2. Exception (if any) |
|---|---|
1. The expenditure is treated as incurred for the purposes of a qualifying activity under—
| |
2. The plant or machinery is the subject of special leasing (as defined by section 19). | |
3. The plant or machinery is a car (as defined by section F6268A). | F7The car is a hire car for a disabled person (as defined by section 268D). |
F44. The expenditure is special rate expenditure (see Chapter 10A). | F8The expenditure is incurred on the provision of a car which is a hire car for a disabled person (as defined by section 268D) |
5. The plant or machinery is provided for leasing. | The plant or machinery is a car which is F9a hire car for a disabled person (as defined by section 268D). The plant or machinery will be used within the designated period (as defined by section 106) for a qualifying purpose (as defined by sections 122 to 125). |
6. Section 109 provides only a 10% writing-down allowance in respect of expenditure on the plant or machinery. | |
7. The plant or machinery is leased to two or more persons jointly in circumstances such that section 116 applies. | |
8. The plant or machinery is a ship. | |
9. The expenditure was incurred partly for the purposes of a qualifying activity and partly for other purposes (see Chapter 15). | |
10. The expenditure is required to be allocated to a single asset pool under section 211 (partial depreciation subsidy). |
85 Election for short-life asset treatment: procedure
1
An election under section 83 must specify—
a
the plant or machinery which is the subject of the election,
b
the qualifying expenditure incurred in respect of it, and
c
the date on which the expenditure was incurred.
2
An election under section 83 must be made by notice given to F2an officer of Revenue and Customs—
a
for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;
b
for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.
3
“The relevant chargeable period” means—
a
the chargeable period in which the qualifying expenditure was incurred, or
b
if the qualifying expenditure was incurred in different chargeable periods, the first chargeable period in which any of the qualifying expenditure was incurred.
4
An election under section 83 is irrevocable.
5
All such assessments and adjustments of assessments are to be made as are necessary to give effect to the election.
86 Short-life asset pool
1
Qualifying expenditure in respect of a short-life asset, if allocated to a pool, must be allocated to a single asset pool (a “short-life asset pool”).
2
If the final chargeable period for the short-life asset pool has not occurred before the F17relevant cut-off—
a
the pool ends at the F17relevant cut-off without a final chargeable period,
b
c
the asset ceases to be a short-life asset.
F163
In this Chapter “the relevant cut-off” means—
a
if any of the qualifying expenditure incurred on the provision of the short-life asset was incurred before the designated day, the fourth anniversary of the end of the relevant chargeable period, and
b
in any other case, the eighth anniversary of the end of the relevant chargeable period.
3A
In subsection (3)—
“the designated day” means—
- a
for corporation tax purposes, 1 April 2011, and
- b
for income tax purposes, 6 April 2011;
- a
“the relevant chargeable period” means—
- a
the chargeable period in which the qualifying expenditure was incurred on the provision of the short-life asset, or
- b
if the qualifying expenditure was incurred in different chargeable periods, the first chargeable period in which any of the qualifying expenditure was incurred.
- a
4
For the purposes of subsection (2), the final chargeable period occurs before the F18relevant cut-off only if it ends on or before it.
F115
In subsection (2)(b) “appropriate pool” means—
a
in the case of expenditure incurred on the provision of a car that is not a main rate car (as defined by section 104AA), the special rate pool, and
b
in any other case, the main pool.
87 Short-life assets provided for leasing
1
This section applies if—
a
plant or machinery is a short-life asset on the basis that it has been provided for leasing but will be used within the designated period for a qualifying purpose (see item 5 of the Table in section 84),
b
in a chargeable period ending on or before the F14relevant cut-off, the short-life asset begins to be used otherwise than for a qualifying purpose, and
c
the time when it begins to be so used falls within the first F158 years of the designated period.
2
If this section applies—
a
the short-life asset pool ends without a final chargeable period,
b
the available qualifying expenditure in the pool is allocated to the main pool for the chargeable period in which the asset begins to be used otherwise than for a qualifying purpose, and
c
the asset ceases to be a short-life asset.
C7C6C8C1488 Sales at under-value
If—
a
a short-life asset is disposed of at less than market value,
b
the disposal is not one in respect of which an election is made under section 89(6), and
c
there is no charge to tax under F1ITEPA 2003,
the disposal value to be brought into account for the purposes of Chapter 5 is the market value of the asset.
89 Disposal to connected person
1
This section applies if, at any time before the F12relevant cut-off, a person (“the transferor”) disposes of a short-life asset to a connected person.
2
Subject to subsection (6)—
a
the transferor is to be treated as having sold the short-life asset to the connected person for an amount equal to the available qualifying expenditure in the short-life asset pool for the chargeable period in which the disposal occurs, and
b
the connected person is to be treated as having incurred qualifying expenditure of the same amount in buying the short-life asset.
3
Subject to subsection (6)—
a
sections 217 and 218 (restrictions on first-year and other allowances in the case of certain transactions between connected persons, to obtain a tax advantage etc.), and
b
F5section 225 (further restrictions in the case of sale and finance leaseback),
do not apply to the disposal.
4
Immediately after the disposal of the short-life asset, the connected person is to be taken to have made an election under section 83 (so that the plant or machinery is a short-life asset in his hands).
5
6
Subsections (2) and (3) apply in relation to a disposal only if—
a
the transferor, and
b
the connected person,
elect that they should apply.
7
An election under subsection (6) must be made by notice given to F2an officer of Revenue and Customs no later than 2 years after the end of the chargeable period in which the disposal occurred.
Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 34) (as amended (20.2.2003) by S.I. 2003/333, art. 14)