CA23163 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): Super-Deduction and Special Rate (SR) Allowance: Qualifying conditions

FA21/S9(1)-(3), (6), (7), (10)

FA21/S9 provides for the conditions that must be met for qualifying expenditure to be super-deduction expenditure or SR allowance expenditure. FA21/S10 makes further provisions about the super-deduction and SR allowance.

The following general conditions must all be met for expenditure to qualify for the super-deduction or the SR allowance:

  • it is incurred on or after 1 April 2021 but before 1 April 2023 – see CA23164
  • it is incurred by a company within the charge to corporation tax
  • the plant or machinery is unused and not second-hand
  • the expenditure is not within any of the general exclusions in CAA01/S46(2) – see CA23165.

Further conditions to qualify for the super-deduction

The 130% super-deduction is available for qualifying expenditure on the provision of main rate plant and machinery (super-deduction expenditure) which, in addition to the general conditions outlined above, meets both of the following conditions:

  • it is not special rate expenditure (defined at CAA01/S104A)
  • the plant or machinery is not for use wholly or partly for the purposes of a ring fence trade, which means a trade in respect of which tax is chargeable under CTA10/S330(1).

Further condition to qualify for the SR allowance

The 50% SR allowance is available for qualifying expenditure on the provision of special rate plant and machinery (SR allowance expenditure) which, in addition to the general conditions outlined above, is special rate expenditure.

Company within the charge to Corporation Tax

There is guidance on whether partnerships are eligible for FYAs available to companies within the charge to Corporation Tax at CA11145

Plant or machinery is unused and not second hand

You can accept that plant or machinery is unused and not second-hand even if it has undergone some limited use for the purposes of testing, delivery or demonstration.

Postponement of first-year allowances on the provision of a ship

CAA01/S130(1) allows a person who is entitled to a first-year allowance for a chargeable period to postpone all or part of that allowance by notice to HMRC. There is guidance on the postponement of FYAs and WDAs at CA25200.

FA21/S9(10) disapplies CAA01/S130(1) for the purposes of the super-deduction and SR allowance. Therefore, claims to the super-deduction and SR allowance for qualifying expenditure on ships cannot be postponed to later chargeable periods.