Plant & Machinery Allowances (PMAs)

These are the most common form of tax relief available for capital spending on building expenditure. From April 2026, relief is available for main rate of qualifying expenditure at a rate of 14% per annum on a reducing balance basis. Rates have been reducing over time from a high of 25% before April 2008, to 20% before April 2012 then to the 18% rate before the current 14%. For the special rate of qualifying expenditure, often known as ‘Integral Features’, and introduced in 2008, the initial rate was 8% but now sits at 6% per annum, reducing basis.

PMAs are available in a variety of forms, many of which changed over the decades, due to political, economic and simplification reasoning, with a more recent refocus on First Year Allowances to accelerate savings to stimulate economic growth.

Taxpayers who incur expenditure on commercial property are likely to qualify for PMAs if they are:

  • Constructing

  • Fitting out

  • Refurbishing

  • Extending

  • Buying or selling property

Our team combines property and surveying expertise, so we understand all aspects of the development process and its tax complexities and can advise you accordingly.

New Build/Refurbishment

PMAs are the main form of tax relief available on new construction, refurbishment and fit-out expenditure. Effective advice and planning around these allowances can significantly reduce the overall project expenditure and increase its viability.

Issue

Property owners and developers are always looking to maximise the return on their developments. But, property and tax advisers and/or departments who don’t act together can often hamper this to the detriment of the overall project. Quantifying and maximising the amount of relief available is a skilled, specialist and time consuming process. Each year, businesses lose significant value by not claiming capital allowances, under claiming and/or not claiming the relief sufficiently early.

Relief

PMAs are one of a series of reliefs which include primarily the Main Rate of Capital Allowances, Special Rate Integral Features Assets, First Year Allowances, Annual Investment Allowances and Long and Short Life Assets. PMAs relief are a deduction from profits but can easily be matched against capital expenditure; this relief can represent a cash saving of up to 20% on construction/fit-out/refurbishment costs.

Approach

We are a team of tax qualified property professionals with senior level experience at the Big 4 Accountancy firms. As a result, we understand the development issues, and all the tax and accounting aspects of construction projects. We are specialists who can work alongside your own tax and project advisers. Offering a complete service, we can undertake feasibility and entitlement reviews through to claim preparation and securing the best possible claims with HMRC.

Detail

Capital Allowances are available to businesses that incur capital expenditure for the purposes of their trade. The relief rate differs according to the type of allowance. Generally, applicants must ‘own’ an asset to make a successful claim. Claimed through the tax computation, the relief is given over a number of years.

Opportunities

  • Including tax savings in feasibility estimates and cost plans can secure greater project returns; significantly increasing project viability and enhancing build parameters and specification.

  • Capital Allowances planning during detailed design can increase the relief available by including tax qualifying assets and energy efficient designs.

  • Tax planning whilst negotiating over contributions and grants can increase cash savings by as much as 20% of the contribution and grant value.

  • Establishing a claim negotiation strategy and risk profile at the outset provides greater claim certainty and smoothes the claim agreement process.