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
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Expenditure on small items of plant and machinery |
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Conditions to be satisfied if capital allowances are to be given |
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Meaning of 'machinery or plant' |
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Meaning of 'necessarily provided for use in the performance of the duties' |
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In the performance of the duties: the need to establish what the duties require |
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Necessarily provided: the need to establish whether the employer would provide the machinery or plant |
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Apportionment of allowances where there is both business and private use |
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Use of machinery or plant for business entertaining |
Calculation of the allowances due
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Cases to be seen by an Inspector |
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Annual Investment Allowance: general |
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First year allowances: general |
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First year allowances: exceptions |
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Rates of first year allowance |
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Withdrawal of 100% first year allowance in respect of machinery and plant acquired for use primarily in Northern Ireland |
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Writing down allowances: general |
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Writing down allowances: the amount on which the allowance is calculated |
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Balancing allowances and charges: when they arise |
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Balancing allowances and charges: how they are calculated |
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Balancing allowances and charges: the value to take |
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Small Pools Allowance |
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
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Bicycles |
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Books |
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Briefcases |
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Computers and word processors |
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100% first year allowance for computers and hi-tech communications equipment bought between 1 April 2000 and 31 March 2004 |
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Mobile telephones, car telephones and in-car entertainment |
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Motor vehicles: general |
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Pocket 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
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Car mechanics |
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Clergymen |
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Insurance agents |
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Teachers in higher education |
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Teachers and academics |
Procedures
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How capital allowances are given, and how balancing charges are taxed |
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Claims and appeals |
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UK based earnings and earnings charged on remittance |
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Set-off of excess capital allowances against other income |
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Capital allowances and loan interest relief |
Examples
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Calculation of first year allowance |
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Writing down allowances: restriction of allowance in year employment begins |
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Adjustments for private use |
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Balancing allowances and charges |

