Areas of risk within Capital Allowances for Plant and Machinery

Depreciation of fixed assets charged in the accounts is not allowed as a deduction in computing taxable profits.

Capital allowances may be given instead. Plant and machinery allowances give
relief at prescribed rates for fixed assets that are plant and machinery.

In order to qualify for plant and machinery allowances you must:

  • be carrying on a qualifying activity

  • incur qualifying expenditure


This an extract from the recently updated HMRC toolkit for Capital Allowances which follow in every one of our cases. Details of which can be found here.

One of the main areas of risk for capital allowances for plant and machinery is:

Record keeping

Good record keeping is essential. Lack of such records can mean that information provided is not accurate resulting in the submission of incorrect tax returns. An asset may be owned by the business for a number of years and without good records it may be difficult to determine the correct capital allowances treatment. For example, an asset may have had different proportions of non-business use during the period of ownership that will affect the balancing allowance or balancing charge on disposal. Detailed records of all acquisitions and disposals including their value are important. These records make it easier to gather the relevant information when needed and consider the current position to help complete the return correctly and completely.

For more details, drop me a line on – thanks – Arthur.

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