If you have acquired a second hand property and not previously claimed Plant and Machinery Allowances (“PMA”), we can identify the available allowances, leading to additional tax savings. 


It is important to remember that there is generally no time limit on claiming PMA.  If you still own an asset, you can include additional PMA in a current or open tax return. 


Property Acquisitions Before April 2012 


When a client buys a property, we can allocate the price paid to the appropriate pools by undertaking a just and reasonable apportionment in accordance with the relevant legislation (CAA 2001 s562).   


Example 1 


An investment client buys a regional office in 2009 for £5m from a pension fund.  Based on an apportionment of the price paid, we identified PMA of £1.5m


However there are a number of entitlement issues to consider, such as prior owner claims and s198 elections.  For properties acquired since April 2008, there may be an opportunity to identify additional integral features, even with a CAA2001 s198 election in place. 


Example 2 


An owner occupier buys an office in January 2011 for £10m with an s198 election for £2.  The vendor bought the property in 2006, so could not claim the lighting etc.  An apportionment of the price identified additional PMA of £1m


Fixed Value / Pooling Requirement for Fixtures


Effective from April 2012, where a vendor of a property has claimed PMA, both parties must formally agree on a figure representing the value of the PMA passing between the parties.   


This requirement will normally be achieved by entering into a CAA2001 s198 election.   


Mandatory ‘Pooling’ of fixtures came into force in April 2014, effectively introducing a “use it or lose it” regime.   


‘Pooling’ means that where a Vendor could have claimed PMA during its ownership, then the Purchaser will only be able to claim PMA if the vendor has in fact made a PMA claim in a tax return.  The PMA must then be transferred with a CAA2001 s198 election. 


Example 3


An investor buys a property in April 2015 for £2m.  The vendor acquired the property in 2009 and has not claimed any PMA.  The contract remains silent so any potential PMA are lost. 


Example 4 


As example 3, but the Purchaser obtains capital allowances advice from IMH Advisory.  A clause is inserted into the purchase contract, confirming the vendor will pool any available PMA and transfer these in full to the purchaser.  It is established the prior owner was a non-tax payer. Based on an apportionment of the price paid by the vendor, we identified PMA of £300,000


The new rules do not apply to non-taxpayers and other entities that are not entitled to claim PMA, such as pension funds, charities and property developers who hold a property as trading stock.  


Example 5 


An owner occupier buys a warehouse with offices in May 2015 for £1.5m. The vendor is a pension fund, so the pooling requirement does not apply.  The vendor bought the property from the original developer.  Therefore no restriction applies and an unrestricted apportionment identified additional PMA of £250,000




It is important to ascertain when these rules apply and ideally act before the purchase contract has been finalised.  Importantly, there are still opportunities to identify further PMA.   


However failure to satisfy the Fixed Value and Pooling Requirement will mean the purchaser and all subsequent owners will potentially be entitled to no capital allowances. 

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