Capital Allowances Act 2001 section 70

Plant or machinery provided by lessee

Section 70 deals with the capital allowances treatment where a tenant is required by the terms of a lease to provide plant or machinery that the tenant does not own.

• Where a lease requires a tenant to provide plant or machinery at their own capital expense for a qualifying activity, and the items remain chattels (not fixed to the building so as to become part of it), the tenant is treated as the owner for capital allowances purposes even though they do not legally own the equipment.
• The tenant's deemed ownership lasts for as long as the plant or machinery continues to be used for the qualifying activity, but the mere ending of the lease does not trigger a disposal event for the tenant — so no disposal value needs to be brought into account simply because the lease expires.
• If the plant or machinery is still in use for the tenant's qualifying activity when the lease ends, the landlord holds the lease in the course of a qualifying activity, and a subsequent disposal event occurs while the landlord owns the equipment, then the landlord must bring a disposal value into account in the capital allowances pool that would have applied had the landlord originally incurred the expenditure.
• For these purposes, "lease" is broadly defined to include agreements for a lease (where the term has begun) and any tenancy, but expressly excludes a mortgage.