SE36520 - Deductions from emoluments: capital allowances: conditions to be met if capital allowances are to be given

Section 36 CAA 2001 (previously, Section 27(2) CAA 1990)

Note that employees are not entitled to claim capital allowances for a car, van, motor cycle or bicycle after 5 April 2002. For 2002/03 onwards, the only way that employees can obtain tax relief for using their own vehicle for work is by a deduction for mileage allowance relief (seeSE31330onwards).

General conditions relating to capital allowances for employees

The general rule is that deductions under the capital allowances legislation as it applies to Schedule E, can only be given in respect of capital expenditure incurred by an employee or office holder on

• machinery or plant (see SE36530)
• which is necessarily provided for use in the performance of the employee’s duties (see SE36540).

For 1996/97 and earlier, the expenditure must also be notified to the Revenue within the time limit set out in SE36860.

The 'necessarily provided' test is a special rule which only applies to Schedule E taxpayers. Otherwise, the capital allowances legislation in Part 2 CAA 2001 applies to offices and employments in the same way that it applies to trades.

Note that the 'necessarily' test was removed

• for any mechanically propelled road vehicle with effect from 6 April 1990 (see SE36750) and
• for bicycles with effect from 6 April 1999 (see SE36700).

The term 'mechanically propelled road vehicle' is not defined in the Act. It should be taken to include a car, a motor cycle or a van. Remember though that, for 2002-03 onwards, employees are not able to claim capital allowances at all for cars, vans, motor cycles or bicycles.

The 'necessarily' test still applies to all other items of plant and machinery.