Capital Allowances Act 2001 section 195

Acquisition of ownership by equipment lessee

Section 195 deals with how an equipment lessee can become the owner of a fixture by paying a capital sum to discharge their obligations under the equipment lease.

• When an equipment lessee pays a capital sum to discharge their financial obligations under an equipment lease, they are treated as having incurred capital expenditure on the fixture equal to that sum.
• The equipment lessee is regarded as the owner of the fixture from the time the capital payment is made.
• The expenditure treated as incurred is the capital sum actually paid — not any other amount or valuation.
• These rules also apply where the equipment lessee's obligations have been assigned to another person, so that the assignee steps into the lessee's shoes for these purposes.