298 Allowances to lessors

A person carrying on a trade of leasing is entitled to capital allowances in respect of machinery or plant in the normal way. Section 298 addresses the entitlement to such capital allowances of persons who lease plant and machinery other than in the course of a trade (non-trading lessors).

(1) A non-trading lessor is entitled to an initial allowance (if available) and wear and tear allowances in relation to machinery or plant where the burden of wear and tear of the machinery or plant falls directly on the lessor. The allowances available are equal to the amount which would have been allowed if during the period of letting the machinery or plant were used for the purposes of a trade carried on by the lessor. The lessor must make a claim for any such allowances within 24 months after the end of the relevant chargeable period.

(2) Where the burden of wear and tear of leased machinery or plant falls directly on the non-trading lessor, the balancing allowance and balancing charge provisions apply as if during the term of the letting the machinery or plant were in use for the purposes of a trade carried on by the lessor.

Relevant Date: Finance Act 2019