EIM36500 - Deductions from earnings: capital allowances: introduction: arrangement of guidance

Section 36 CAA 2001

Introduction

The general rule for employees’ expenses in Section 336 ITEPA 2003 (see generally EIM31620 onwards) does not specifically prevent a deduction for expenditure on plant and machinery used in performing the duties of an office or employment. But substantial expenditure of this kind will not usually qualify for a deduction under Section 336 because it puts an employee in a position to perform the duties rather than being incurred in their actual performance.

Normally therefore allowances for capital expenditure on machinery and plant should be given (and balancing charges should be made where necessary) under the capital allowances rules in Part 2 of the Capital Allowances Act 2001. Those rules are applied to employees and office holders by Section 15 CAA 2001. For 2000/01 and earlier years, the corresponding provisions are in Part II Chapter I of the Capital Allowances Act 1990.

Do not give deductions for expenditure on acquiring plant and machinery under the general rule for employees’ expenses in Section 336 ITEPA 2003 except in the circumstances described at EIM36510.

The detailed guidance on capital allowances for employees and office holders is arranged as shown in the following tables.

Expenditure qualifying for capital allowances

EIM36510Expenditure on small items of plant and machinery
EIM36520Conditions to be satisfied if capital allowances are to be given
EIM36530Meaning of 'machinery or plant'
EIM36540Meaning of 'necessarily provided for use in the performance of the duties'
EIM36550In the performance of the duties: the need to establish what the duties require
EIM36560Necessarily provided: the need to establish whether the employer would provide the machinery or plant
EIM36570Apportionment of allowances where there is both business and private use
EIM36580Use of machinery or plant for business entertaining

Calculation of the allowances due

EIM36600Cases to be seen by an Inspector
EIM36610First year allowances: general
EIM36620First year allowances: exceptions
EIM36630Rates of first year allowance
EIM36640Withdrawal of 100% first year allowance in respect of machinery and plant acquired for use primarily in Northern Ireland
EIM36650Writing down allowances: general
EIM36660Writing down allowances: the amount on which the allowance is calculated
EIM36670Balancing allowances and charges: when they arise
EIM36680Balancing allowances and charges: how they are calculated
EIM36690Balancing allowances and charges: the value to take

Particular items of machinery or plant.

Note that, except where this is made clear in the text, the guidance in these pages supplements but does not replace the general guidance in the pages listed above

EIM36700Bicycles
EIM36710Books
EIM36720Briefcases
EIM36730Computers and word processors
EIM36731100% first year allowance for computers and hi-tech communications equipment bought between 1 April 2000 and 31 March 2004
EIM36810Mobile telephones, car telephones and in-car entertainment
EIM36750Motor vehicles: general
EIM36800Pocket calculators

Particular types of employment

Note that, except where this is made clear in the text, the guidance in these pages supplements but does not replace the general guidance in the pages listed above

EIM60055Clergymen
EIM64650Insurance agents
EIM70705Teachers in higher education
EIM70790Teachers and academics

Procedures

EIM36850How capital allowances are given, and how balancing charges are taxed
EIM36870Claims and appeals
EIM36880UK based earnings and earnings charged on remittance
EIM36890Set-off of excess capital allowances against other income
EIM36900Capital allowances and loan interest relief

Examples

EIM36910Calculation of first year allowance
EIM36915Writing down allowances: restriction of allowance in year employment begins
EIM36925Adjustments for private use
EIM36930Balancing allowances and charges