Commentary

B3.339 Plant and machinery allowances and leases—overview

Business tax
Business tax | Commentary

B3.339 Plant and machinery allowances and leases—overview

Business tax | Commentary

Plant and machinery allowances and leases

B3.339 Plant and machinery allowances and leases—overview

The general rules for capital allowances on plant and machinery apply with certain modifications where the plant or machinery is used for leasing or acquired by hire purchase.

Where a person incurs capital expenditure on the provision of plant or machinery by hire purchase or under a conditional sale agreement (ie where the contract provides that he will or may become the owner of the asset on completion of the contract, for capital allowances purposes the asset is treated as owned by him (and not by any other person) at any time when he is entitled to the benefit of the contract. See B3.340A.

Where a lessee has to provide plant or machinery under the terms of a lease but does not own it, a special rule requires the lessor to bring a disposal value into account in certain cases where a disposal event occurs on or after the ending of the lease. See B3.340B.

Anti-avoidance provisions apply to counteract certain benefits derived from the exploitation of capital allowances for plant and machinery through the medium of leasing operations and associated arrangements. See B3.340C. Further anti-avoidance provisions apply to target changes in the economic ownership of a plant or machinery leasing business carried on by a company on its own or in partnership. See B3.340CA.

Particular provisions apply to finance leases of plant and machinery. Where some or all of the lessor's return is a major lump sum, anti-avoidance provisions

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