In general, where chattels are leased, it should be accepted
that the leasing is by way of trade.
In cases where there is no personal involvement by the
lessor, but there is trading activity by a manager as agent for the
lessor, the lessor’s income is assessable under Schedule D
Case I.
In exceptional cases, where the evidence of trading is
extremely slight, for example if only one asset has been acquired
for leasing and there is no personal involvement by the lessor or
any semblance of a trading organisation, the lessor’s
activities are more likely to be in the nature of an investment
than trading, with the income assessable Schedule D Case VI.
Plant and machinery allowances may be due to a Case VI
chattels lessor via CAA01/S67, although there are more restrictions
on the way non-trading allowances under CAA01/S67 can be used, see
CA24010 onwards.
