Long funding leases

Produced by Tolley in association with Martin Wilson and Steven Bone
Owner-Managed Businesses
Guidance

Long funding leases

Produced by Tolley in association with Martin Wilson and Steven Bone
Owner-Managed Businesses
Guidance
imgtext

The concept underlying the capital allowances treatment of a long funding lease is that the lessor (the legal owner of the plant and machinery) is effectively lending money to the lessee (the person using the asset) to enable the lessee to buy the plant and machinery. The most significant feature of the rules is that, provided certain conditions are met, capital allowances are available to the lessee rather than the lessor. However, there are extensive exceptions to the long funding lease rules, notably affecting fixtures and other plant included in, or sold with, property.

A lessee does not have to come within the regime if they do not want to, but can instead claim a deduction for lease rentals in the usual way.

There is provision for a lessor to elect that all new leases entered into by it shall be treated as long funding leases (if they would not otherwise be so). This does not apply to leases of cars or of assets which cost more than £10m.

For more information on long funding leases,

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
Martin Wilson
Martin Wilson


Martin Wilson, specialised in capital allowances for 25 years before retirement. He is the author of numerous published works on the subject, including Bloomsbury's Capital Allowances: Transactions & Planning, and the capital allowances content of LexisPSL, Tolley's Tax Guidance, Tolley's Tax Planning and Simon's Tax Planning.

Steven Bone
Steven Bone linkedinicon twittericon

Director at Gateley Capitus


Steven is a tax-qualified Chartered Surveyor who has specialised in tax incentives, including capital allowances and land remediation relief for over 20 years. Previously he held senior specialist positions in 'Big 4' and national mid-tier accountancy firms. Capital allowances underpin income tax and corporation tax calculations by giving tax relief for money spent to buy, build or alter commercial property.Steven works with owner-occupiers, investors and their advisers to provide capital allowances opinions, transaction support and specialist valuations for all types of property.  This includes resolving HM Revenue capital allowances enquiries and giving expert evidence to tribunals and courts.Steven has contributed to many articles and books, including: Bloomsbury Professional's Capital Allowances, Tolley's Tax Planning, RICS's official Guidance Note for surveyors on Capital Allowances and Land Remediation Relief, and Practical Law Company's Practice Note on Commercial Property Standard Enquiry 32 dealing with capital allowances.

Powered by Tolley+

Popular Articles

Allowable deductions for employee-related expenses

Allowable deductions for employee-related expensesThis guidance note covers the tax treatment of some common types of trading expenditure relating to employees. Some of these are disallowable under general principles, for example the wholly and exclusively test or capital versus revenue expenditure.

14 Sep 2022 09:49 | Produced by Tolley Read more Read more

Carried-forward losses restriction

Carried-forward losses restrictionOverview of the carried-forward loss restrictionAn important restriction in the use of losses carried forward was introduced by Finance (No 2) Act 2017. Subject to a de minimis of £5m (known as the deductions allowance), most carried-forward losses are restricted to

14 Jul 2020 11:09 | Produced by Tolley Read more Read more

Research and development (R&D) relief ― overview

Research and development (R&D) relief ― overviewThis guidance note provides an overview of the research and development (R&D) tax reliefs for companies.See the Research and development tax relief summary diagram which summarises the R&D tax relief.See also Simon’s Taxes D1.401.For a factsheet which

14 Jul 2020 12:22 | Produced by Tolley in association with Will Sweeney Read more Read more