Capital Allowances Act 2001 section 70I

"Short lease"

Section 70I defines what constitutes a "short lease" for capital allowances purposes and sets out the circumstances in which a lease that would otherwise qualify as short is excluded from that classification.

• A short lease is one whose term is 7 years or less, but several exceptions can override this basic definition
• Where arrangements exist to lease the same asset to connected persons under successive leases whose combined terms exceed 7 years, the lease is not treated as short
• Finance leases forming part of a lease and finance leaseback or a sale and finance leaseback arrangement are automatically excluded from being short leases
• In a sale and finance leaseback scenario, the buyer and seller may jointly elect to disapply the automatic exclusion, with specific consequences for how each party's capital allowances are calculated