Where a person carrying on a trade incurs capital expenditure on a right to use or otherwise deal with computer software, the expenditure is treated as having been incurred on the provision of plant or machinery for the purposes of the trade (CAA 2001, s. 71). As long as the person is entitled to the right, the plant or machinery will be treated as his.

Where capital expenditure is incurred on computer software which does not constitute plant or machinery – for example, software transmitted electronically from the owner to the person who incurs the expenditure – the software is treated as plant or machinery for capital allowances purposes.

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