Capital Allowances Act 2001 section 538

Plant and machinery

Section 538 sets out how capital allowances work when a person (the contributor) makes a financial contribution towards someone else's expenditure on plant or machinery, and that contribution is made for the purposes of the contributor's own trade or relevant activity.

• Where a contributor funds another party's plant or machinery expenditure for the contributor's own trade or relevant activity, the contributor is treated as though they incurred the expenditure, owned the asset, and used it in their own business.
• Any expenditure treated as incurred by the contributor under these rules must be allocated to a single asset pool, attracting writing-down allowances at the appropriate rate.
• If the contributor's trade or relevant activity is wholly transferred, writing-down allowances for periods after the transfer pass to the transferee in place of the transferor.
• If only part of the trade or relevant activity is transferred, writing-down allowances pass to the transferee only to the extent properly referable to the part transferred.