What are qualifying activities for capital allowances purposes?
Qualifying activities are:
- A trade
- A property business (UK or overseas)
- A profession or vocation
- An employment
- Special leasing of plant and machinery
- Managing the investments of a company with investment business
- A concern in mines or transport undertakings
but only the extent that the profits or gains from the above activities are or would be taxable.
Property letting
Expenditure on plant and machinery for use in a let dwelling house, does not qualify for plant and machinery allowances (section 35 CAA 2001).
As an alternative a wear and tear, or replacement cost basis may be claimed instead.
Expenditure on plant and machiney for use in a qualifying furnished holiday letting activity qualifies for plant and machinery allowances.
Mixed use assets
When expenditure is incurred for the purposes of a trade, but there is also private use capital allowances can be claimed ensuring there is a restriction, worked out on any reasonable basis for the private use.
Capital allowances and employees
Where the qualifying activity is an employment (or office), no capital allowances may be claimed on expenditure on motor vehicles and cycles.
