Capital Allowances Act 2001

Capital Allowances Act 2001

2001 CHAPTER 2

Commentary on Sections

Glossary

Part 2: Plant and machinery allowances

Chapter 10: Long-life assets

Sections 97 to 100: Monetary limit

424. These four sections are based on sections 38C and 38D of CAA 1990. They provide a de minimis limit. Expenditure is not usually long-life asset expenditure if a person’s total expenditure on long-life assets is less than £100,000 a year. If the limit is exceeded all the relevant expenditure is long-life asset expenditure.

425. Section 98 means the limit is available to:

• individuals and partnerships within subsections (1) and (2); and

• any company, for the purposes of corporation tax.

426. There is a minor change in section 98(1)(a). It refers to any qualifying activity carried on by an individual. Section 38C(3)(a) of CAA 1990 only refers to trades and professions. See Change 19 in Annex 1.

427. Section 99 gives the £100,000 limit. It also:

• increases or reduces the limit if a chargeable period is more or less than a year; and

• reduces the limit if a company has associated companies. This reduction is done in the same way that the limit for small companies relief is reduced in section 13 of ICTA.

428. Section 100 sets out when the limit is exceeded. It also provides that all the expenditure on an item of plant or machinery is looked at to see if the limit is exceeded – not just the expenditure which is incurred (or treated as incurred) in a particular chargeable period.