Taxes Consolidation Act 1997 section 291

Computer software

Section 291 provides that capital expenditure on computer software, or on the right to use computer software, qualifies for plant and machinery capital allowances where the software is acquired for end use within the business rather than for commercial exploitation.

• Capital expenditure on computer software or on a right to use software for trade purposes is treated as expenditure on plant and machinery, qualifying for wear and tear allowances written off over 8 years.
• Since the Finance Act 2010, a distinction is drawn between "end-use" software (used within the business) and software acquired for commercial exploitation: only end-use software qualifies under this section, while commercially exploited software falls under the intangible assets scheme in section 291A.
• For a company to claim under this section, the software must be provided for use in the company's own trade operations and must not be acquired for the purpose of licensing or granting rights to others in return for royalties.
• A transitional provision allowed companies to elect, in respect of capital expenditure incurred between 4 February 2010 and 4 February 2012, to claim plant and machinery allowances under this section even for software that would otherwise fall within the intangible assets regime.