Capital Allowances Act 2001 section 70R

Excluded leases of background plant or machinery for a building

Section 70R defines when a lease of background plant or machinery for a building qualifies as an "excluded lease", thereby falling outside the long funding lease rules.

• Background plant or machinery is equipment that could typically be found in many different types of building and whose main purpose is to make the building function as a working environment — examples include heating, ventilation, air conditioning, electrical systems and lifts.
• Where such background plant or machinery is attached to or installed in a building and is leased together with the land under a mixed lease, the plant or machinery element (the "derived lease") can be treated as an excluded lease, provided none of the disqualifications in section 70S apply.
• Being classified as an excluded lease means the derived lease of the background plant or machinery is not treated as a long funding lease, so the special long funding lease capital allowance rules do not apply to it.
• The Treasury has power under section 70T to make orders that modify or clarify what counts as background plant or machinery for these purposes.