CA20010 - Plant and Machinery Allowances (PMA): introduction: qualifying activities

CAA01/S15

In order to qualify for PMAs, a taxpayer must incur capital expenditure on the provision of plant or machinery wholly or partly for the purposes of a qualifying activity carried on by the taxpayer.

The qualifying activities for PMAs are:

  • a trade (BIM20000);
  • a UK property business (PIM1020);
  • an overseas property business (PIM1025);
  • a profession or vocation (BIM14010);
  • mine, quarry or canal or other concern giving rise to profits from land charged to tax as a trade under ITTOIA05/S12(4) or CTA09/S39(4) (BIM15070);
  • management of an investment company (CA20050);
  • special leasing business (CA20040);
  • employment or office (CA20015).

An activity listed above is a qualifying activity only to the extent that the profits or gains from that activity are, or (if there were any) would be, chargeable to tax.

PMAs calculated separately for each qualifying activity

PMAs must be calculated separately for each qualifying activity.

Example

John owns and operates a corner shop. John also lets a flat that is located above the corner shop. John is carrying on two qualifying activities (a trade and a UK property business). John must calculate PMAs separately for his trade and his UK property business.

Restriction for dwelling-houses for property businesses and special leasing

Where the qualifying activity is a UK property business, overseas property business or special leasing of plant or machinery, expenditure incurred on the provision of plant or machinery for use in a dwelling-house does not qualify for PMAs (CA23060).

Foreign permanent establishments

Where a company carries on a business through permanent establishments outside the UK (foreign permanent establishments) and an election for exemption if made under CTA09/S18A, the business carried on in the permanent establishment is treated as a separate activity whose profits and gains are not chargeable to tax (INTM285000).

Furnished holiday lettings business (repealed)

The furnished holiday lettings rules have been repealed from April 2025. Therefore, a UK or EEA furnished holiday lettings business is no longer a qualifying activity for PMAs with effect for:

  • accounting periods beginning on or after 1 April 2025 for Corporation Tax purposes; and
  • periods of account beginning on or after 6 April 2025 for Income Tax purposes.

With effect from these dates, a business that would previously have been classified as a UK or EEA furnished holiday lettings business will instead be classified as a UK or overseas property business and will be subject to the exclusion for plant or machinery for use in a dwelling-house (CA23060).

There is guidance for chargeable periods beginning before those dates and the transitional rules which apply for PMAs at CA20025.