Finance Leasing Manual - FLM1.10

Capital allowances

Generally speaking, capital allowances are given to the legal owner of the asset. This is so whether the lease is a finance lease or an operating lease. But this is a complex subject. For example:

• in the case of industrial buildings, the allowances broadly go to the holder of the 'relevant interest' (CA1004); broadly the freehold or leasehold interest held by the person who originally incurred the expenditure on the asset or their successor(s);

• in the case of machinery and plant the allowances go to the legal owner of the asset; but there are also special rules for hire purchase cases and for fixtures (CA2030(b), CA2050, CA2182 and CA2512 respectively).