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Paragraph 18 Plant and machinery allowances

United Kingdom

(1)

This paragraph applies for the purposes of Part 2 of CAA 2001 (plant and machinery allowances) where—

(a)

immediately before the end of a person’s pre-commencement chargeable period, the person is carrying on an FHL qualifying activity, and

(b)

at the start of the person’s post-commencement chargeable period, the person is carrying on the corresponding property activity.

(2)

The amount of any allowance or charge arising in the person’s post-commencement chargeable period or any subsequent chargeable period is to be calculated as if anything done by or to the person in carrying on the FHL qualifying activity had been done by or to the person in carrying on the corresponding property activity.

(3)

In particular—

(a)

where plant or machinery is in use for the purposes of the FHL qualifying activity immediately before the end of the person’s pre-commencement chargeable period—

(i)

the plant or machinery is to be treated as if it had been brought into use for the purposes of the corresponding property activity on the day on which it was brought into use for the purposes of the FHL qualifying activity, and

(ii)

its use for the purposes of the FHL qualifying activity is to be disregarded.

(b)

where the person has unrelieved qualifying expenditure (within the meaning given by section 59 of CAA 2001) to carry forward from the person’s pre-commencement chargeable period in a pool for an FHL qualifying activity, the expenditure is to be—

(i)

carried forward to the person’s post-commencement chargeable period, and

(ii)

allocated to the appropriate pool for the corresponding property activity.

(4)

Accordingly, the person is not to be taken, by reason only of the effect of the amendments made by this Schedule, as having—

(a)

brought plant or machinery into use, or ceased to use plant or machinery, for the purposes of a qualifying activity, or

(b)

permanently discontinued a qualifying activity.

(5)

Section 35 of CAA 2001 (expenditure on plant or machinery for use in dwelling-house not qualifying expenditure) does not apply to expenditure carried forward in accordance with sub-paragraph (3)(b)(i).

(6)

In this paragraph—

  • “FHL qualifying activity” means a UK furnished holiday lettings business or an EEA furnished holiday lettings business;

  • “the corresponding property activity” means—

    1. (a)

      in relation to a UK furnished holiday lettings business carried on by a person, a UK property business carried on by that person, and

    2. (b)

      in relation to an EEA furnished holiday lettings business carried on by a person, an overseas property business carried on by that person;

  • “pre-commencement chargeable period” means—

    1. (a)

      for corporation tax purposes, a company’s last accounting period to begin before 1 April 2025, and

    2. (b)

      for income tax purposes, the tax year 2024-25;

  • “post-commencement chargeable period” means—

    1. (a)

      for corporation tax purposes, the accounting period beginning on 1 April 2025 (see paragraph 15), and

    2. (b)

      for income tax purposes, the tax year 2025-26.

(7)

Expressions used in sub-paragraph (6) have the same meaning as in Part 2 of CAA 2001.