Finance Leasing Manual - FLM12.49

Ownership of leased assets: purchase options

The lessor's title to capital allowances when making a finance lease of machinery or plant depends on the fact that the asset belongs to him (Section 24(1) CAA 1990). This means that the parties normally have to be careful that the documentation provides no right for the lessee to acquire the asset. Such a right may trigger Section 60 CAA 1990 (the 'hire purchase' rule) and shift title to the capital allowances to the lessee.