Corporation Tax Act 2010 section 398F

Limit on availability of capital allowances to A

Section 398F restricts the lessor company's ability to claim capital allowances on expenditure used to acquire or create certain types of assets known as "independent assets".

• Expenditure by the lessor (A) on plant or machinery that constitutes an independent asset does not qualify for capital allowances under Part 2 of the Capital Allowances Act 2001.
• An "independent asset" is one that, in the normal course of business, can be used on its own, regardless of whether it could also form part of a larger combined asset.
• An asset also counts as independent if it can be used at different times as a component of different combined assets.
• A "combined asset" is defined as a single asset made up of more than one individual asset.