Capital Allowances Act 2001 section 70U

Plant or machinery leased with land: low percentage value

Section 70U provides an exclusion from long funding lease treatment for plant or machinery that is leased with land but is not background plant or machinery, where the value of that plant or machinery is low relative to the value of the background plant or machinery and the land.

• Applies to plant or machinery affixed to or installed on land that is not background plant or machinery for any building on the land, is leased with the land under a mixed lease, and is not subject to any of the specified disqualifications
• The derived lease of the relevant plant or machinery is excluded if, at the start of the lease term, the aggregate market value of the relevant plant or machinery (plus any other non-background plant or machinery leased with the land) does not exceed both 10% of the aggregate market value of all background plant or machinery leased with the land and 5% of the market value of the land (including buildings and fixtures)
• The disqualifications that apply are the same as those set out for background plant or machinery exclusions, but adapted so that references to background plant or machinery are read as references to the relevant plant or machinery covered by this section
• Land market value is determined on the assumption of a sale by an absolute owner free from all leases and other encumbrances