Capital Allowances Act 2001 Schedule 3 paragraph 31

Equipment lessee has qualifying activity etc.

Schedule 3 paragraph 31 modifies the rules in section 178 (which determine when an equipment lessee is treated as the owner of a fixture) depending on when the lease agreement was made and when the relevant expenditure was incurred.

• Section 178 sets out the conditions under which an equipment lessee can be treated as the owner of a fixture for capital allowances purposes.
• For lease agreements entered into before 19 March 1997, the requirement that the plant or machinery "is or is to be" a fixture is removed, simplifying the test so that the plant or machinery must already be a fixture.
• For expenditure incurred before 24 July 1996, a further relaxation applies: the lessee need only show that, had they incurred the lessor's capital expenditure on providing the plant or machinery, they would have been treated as the owner of the fixture under section 176.
• These transitional modifications preserve the tax treatment that applied under earlier legislation, ensuring that lessees who entered into arrangements before the relevant dates are not disadvantaged by later changes to the rules.