BLM39005 - Taxation of leases that
are not long funding leases: leases with option for lessee to
purchase the leased asset: whether CAA01/S67 applies
Where, in the case of a lease of plant or machinery, there is
an option for the lessee to buy the asset the rules in CAA01/S67
may give the right to claim capital allowances to the lessee, see
CA23310.
CAA01/S67 applies to a lease contract where:
- the expenditure is incurred under a
contract providing that the lessee shall or may become the owner of
the plant or machinery on the performance of the contract, and
- the lessee incurs capital expenditure on
the provision of plant or machinery for the purposes of a
qualifying activity (typically a trade, but see CA20010).
Where a contract contains an option it is clear that the first
of these conditions is met. But to fall with s.67 the lessee must
meet the second condition and incur capital expenditure –
BLM39010.
