What does Schedule 3 paragraph 18 of the Capital Allowances Act 2001 do?

Schedule 3 paragraph 18 is a transitional provision that restricts section 71 by setting a cut-off date. It provides that section 71, which treats computer software expenditure as plant or machinery expenditure for capital allowances purposes, does not apply to expenditure incurred before 10th March 1992 under United Kingdom law.

What is the significance of 10th March 1992 for software capital allowances in the United Kingdom?

10th March 1992 is the transitional cut-off date set by Schedule 3 paragraph 18. Expenditure on computer software or rights to use computer software incurred on or after this date qualifies under section 71 as plant or machinery for capital allowances. Expenditure before this date is excluded from section 71 and governed by earlier rules.

Can software expenditure incurred before 10th March 1992 qualify for plant and machinery allowances under section 71?

No. Schedule 3 paragraph 18 explicitly excludes expenditure incurred before 10th March 1992 from the scope of section 71. Any software expenditure before that date cannot be treated as plant or machinery expenditure under section 71 and must instead be dealt with under the capital allowances rules that applied at the time.

Is Schedule 3 paragraph 18 still relevant for businesses today?

For most practical purposes today, this transitional rule is of historical interest only, since expenditure incurred before March 1992 will long since have been fully written down or disposed of. Nevertheless, it remains part of United Kingdom legislation as a record of when the software-as-plant treatment under section 71 first took effect.

Capital Allowances Act 2001 Schedule 3 paragraph 18

Software and rights to software

Schedule 3 paragraph 18 restricts the application of the software and rights to software provision in section 71, by excluding expenditure incurred before a specified date.

Section 71 treats expenditure on computer software, or rights to use computer software, as expenditure on plant or machinery for capital allowances purposes.
This transitional rule provides that section 71 does not apply to expenditure incurred before 10th March 1992.
Any software expenditure incurred before that date falls outside the scope of section 71 and must be dealt with under the rules that applied at the time.
For expenditure incurred on or after 10th March 1992, section 71 applies in the normal way, allowing capital allowances on software as plant or machinery.

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