Commentary

B3.340T Overseas leasing of plant and machinery

Business tax
Business tax | Commentary

B3.340T Overseas leasing of plant and machinery

Business tax | Commentary

B3.340T Overseas leasing of plant and machinery

The overseas leasing provisions described in this article do not apply to leases finalised after 31 March 2006.

There are provisions which restrict the rate of capital allowances on plant or machinery that is leased to a person resident overseas under a lease finalised before 1 April 20061. In some cases there are no allowances at all when plant or machinery is used for overseas leasing. The provisions are, in effect, repealed by disregarding leases finalised on or after 2006 in determining whether plant or machinery is used for overseas leasing. The provisions are summarised here as some overseas leasing pools may still exist. For leases finalised after 31 March 2006, allowances are given on the same basis as for UK leasing.

Subject to this, the provisions apply to qualifying expenditure incurred on the provision of plant or machinery for leasing which is at any time in the 'designated period' of 10 years used for 'overseas leasing' which is not 'protected leasing'2.

Cases where allowances are prohibited

No writing-down or balancing allowances were available in respect of qualifying expenditure to which these provisions apply where:

  1.  

    •     the plant or machinery was used otherwise than for a 'qualifying purpose', and

  2.  

    •     the lease was within any of the items in the list below

The list is as follows3:

  1.  

    (1)     The lease was expressed to be for a period that exceeds 13 years

  2.  

    (2)     There was, in the lease or a separate agreement, provision for extending or renewing the

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