Capital allowances for leased assets

1. Definition

1.1. Long funding lease

1.1.1. Funding lease

1.1.2. Is not excluded

1.1.2.1. Short lease

1.1.2.2. Background P&M

1.1.2.3. Lessor entitled to CAs

1.2. Funding lease

1.2.1. P&M lease

1.2.2. Meets at least one test

1.2.2.1. Finance lease test

1.2.2.2. Lease payments test

1.2.2.3. UEL test

1.2.3. Not HP

1.3. Resources: Decision trees

2. Long funding lease

2.1. Lessee has CAs

2.2. Qualifying expenditure

2.2.1. Long funding operating lease

2.2.1.1. MV of P&M

2.2.2. Long funding finance lease

2.2.2.1. Present value of payments

2.3. Disposal values

2.3.1. (QE-QA) + R

2.3.1.1. QA depends on lease

3. Other lease

3.1. Lessor has capital allowances

3.2. May elect for long funding lease treatment

4. Overview

4.1. General rule

4.1.1. Lessor claims CAs

4.2. Spring Budget 2024: announcement that full-expensing to be extended to leased assets 'when affordable'. Draft legislation and consultation to follow.

4.3. Exceptions

4.3.1. Long-funding lease

4.3.2. HP and similar contracts

4.3.3. Lessee required to incur expenditure