Kevin Read explains why more expenditure may now be eligible for plant and machinery capital allowances.
With the 100% annual investment allowance now set permanently at £1m and the introduction of a 100% first-year allowance for companies incurring new general pool expenditure, knowing what qualifies as plant and machinery (P&M) is more important than ever.
For expenditure to be eligible for P&M capital allowances, it must be incurred on an integral part of how the appellant carries out its qualifying activity (such as a trade), not on the setting for that activity. This long-standing ‘function or setting’ test is probably well-known to many readers.
However, where this test appears to indicate P&M, the lists contained in CAA 2001, ss 21-23 still need to be considered. If the expenditure falls within List A (s 21) or List B (s 22), it will not qualify as P&M unless also appearing in
