Capital Allowances Act 2001 section 70L

Plant or machinery leased with other assets: separate derived leases

Section 70L deals with situations where a single lease covers both plant or machinery and other assets, and explains how such a "mixed lease" is split into separate notional leases for capital allowances purposes.

• A "mixed lease" is any agreement that covers both plant or machinery and other assets — the section requires it to be split into separate parts for capital allowances
• A mixed lease qualifies as an "eligible mixed lease" if it is treated as a lease under generally accepted accounting practice, or if it involves a sale and finance leaseback arrangement
• The eligible mixed lease is treated as two separate notional agreements — one for the plant or machinery and one for the other assets — each known as a "derived lease"
• Where a lease qualifies under accounting practice immediately after the lease term begins, it is also treated as qualifying during the earlier period between the lease's inception and the start of the lease term