Capital Allowances Act 2001 section 178

Equipment lessee has qualifying activity etc

Section 178 sets out the conditions that must be met in relation to the equipment lessee before an equipment lessor can qualify for capital allowances on plant or machinery that has become a fixture.

• The equipment lease must be for plant or machinery used in a qualifying activity carried on, or to be carried on, by the equipment lessee.
• The equipment lessee must be the type of person who would have been treated as owner of the fixture under section 176 had they incurred the expenditure themselves.
• These conditions work alongside the main equipment lessor rules in section 177 to determine who can claim allowances on leased fixtures.
• Both conditions must be satisfied — the qualifying activity requirement and the hypothetical ownership test — for the equipment lessor to be treated as the owner of the plant or machinery.