CA23113 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): General exclusions

CAA01/S46

FYA is聽not聽available for the following:

  • expenditure incurred in the chargeable period in which the qualifying activity is discontinued
  • expenditure incurred on the provision of a car, unless it is a qualifying electric car or qualifying car with zero聽CO2 emissions聽CA23153
  • expenditure excluded from long life asset treatment by the transitional provisions in CAA01/Schedule 3, Paragraph 20
  • expenditure incurred on the provision of plant or machinery for leasing聽unless the expenditure is on qualifying energy-saving plant and machinery聽CA23140聽or environmentally beneficial plant or machinery聽CA23135聽and the lease is聽an excluded聽lease of聽background plant or machinery for a building聽CA23835
  • an asset received as a gift
  • an asset brought into use for the purposes of a qualifying activity having been acquired for something聽else, including leasing under a long funding lease
  • an asset provided in connection with a change in the nature or聽conduct of a business carried on by someone else and the main benefit, or one of the main benefits, that could reasonably be expected from the change is obtaining an FYA (this is anti-avoidance legislation).

Exclusion of expenditure on聽plant or machinery provided for leasing

The leasing exclusion applies whether the leasing is in the course of a qualifying activity or otherwise, so activities like special leasing are caught. That means that assets in properties聽let out by the taxpayer are excluded from FYAs. Treat letting a ship on charter or any other asset on hire as leasing. The leasing exclusion also applies to software acquired for licensing or sub-licensing. It does not apply where a person lets another person use software without granting a licence or sub-licence. For example, it does not apply where a person lets another person use software that does no more than allow access to the internet, order goods, or view advertising. In a case like that no rights have been granted and there is no licence or sub-licence.

There is a distinction between the leasing or hiring of an asset and the provision of services that involve the use of an asset聽CA23115.