A lease is, broadly, a contract between a lessor and a lessee, under the terms of which the lessor retains ownership of the asset but the lessee has use of it in return for payment of a rental charge.

In considering the capital allowances available, the starting point is that plant and machinery allowances may be available if a person who is carrying on a ‘qualifying activity’ incurs ‘qualifying expenditure’. Issues then emerge in the context of leasing.

Legislation: CAA 2001, s. 11(1)

Qualifying expenditure

The ‘general rule’ states that expenditure is qualifying expenditure if:

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