This section applies for the purpose of apportioning expenditure incurred on plant or machinery where one or more of the components of the plant or machinery (but not all of it) is of a description specified by Treasury order under section 45H(3).

If the expenditure is treated under this Act as incurred in instalments, the proportion of each instalment that is section 45H expenditure is the same as the proportion of the whole expenditure that is section 45H expenditure.

Where this section applies, the expenditure is not apportioned under section 562(3) (apportionment where property sold with other property).

In this section “ section 45H expenditure ” means expenditure that is first-year qualifying expenditure under section 45H.

Expenditure within any of the general exclusions in subsection (2) is not first-year qualifying expenditure under F3any of the following provisions—

• F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F6 section 45A (expenditure on energy-saving plant or machinery)F7,

• section 45D (expenditure on cars with low CO₂ emissions),

• F8section 45E (expenditure on plant or machinery for gas refuelling station), F9...

• F10section 45F (expenditure on plant and machinery for use wholly in a ring fence trade)

  F11section 45H expenditure on environmentally beneficial plant or machinery.

The general exclusions are—

• General exclusion 1

  The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.

• General exclusion 2

  The expenditure is incurred on the provision of a car (as defined by section F12268A).

• General exclusion 3

  The expenditure is of the kind described in section 94 (ships).

• General exclusion 4

  The expenditure is of the kind described in section 95 (railway assets).

• General exclusion 5

  The expenditure would be long-life asset expenditure but for paragraph 20 of Schedule 3 (transitional provisions).

• General exclusion 6

  The expenditure is on the provision of plant or machinery for leasing (whether in the course of a trade or otherwise).

  For this purpose, the letting of a ship on charter, or of any other asset on hire, is to be regarded as leasing (whether or not it would otherwise be so regarded).

• General exclusion 7

  The circumstances of the incurring of the expenditure are that—

  1. (a)

     the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of a trade or business carried on by a person other than the person incurring the expenditure, and

  2. (b)

     the obtaining of a first-year allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.

• General exclusion 8

  F13Any of the following sections applies—

  • section 13 (use for qualifying activity of plant or machinery provided for other purposes);

  • F14section 13A (use for other purposes of plant or machinery provided for long funding leasing);

  • section 14 (use for qualifying activity of plant or machinery which is a gift).

  This is subject to section 161 (pre-trading expenditure on mineral exploration and access).

Subsection (1) is subject to the following provisions of this section.

General exclusion 2 does not prevent expenditure being first-year qualifying expenditure under section 45D.

General exclusion 6 does not prevent expenditure being first-year qualifying expenditure under any of the following provisions—

• section 45A, if the condition in subsection (6) is met,

• section 45D,

• section 45H, if the condition in subsection (6) is met.

The condition is that the plant or machinery is provided for leasing under an excluded lease of background plant or machinery for a building, within the meaning given by section 70R.