Taxes Consolidation Act 1997 section 298

Allowances to lessors

Section 298 provides for capital allowances for non-trading lessors of machinery or plant where the burden of wear and tear falls directly on the lessor.

• A non-trading lessor who bears the burden of wear and tear on leased machinery or plant may claim initial allowances and wear and tear allowances as if the asset were used in a trade carried on by the lessor.
• The lessor must make a claim for these allowances within 24 months after the end of the relevant chargeable period.
• Balancing allowance and balancing charge rules apply to the lessor as though the machinery or plant were in use for a trade during the term of the letting.
• The lessee cannot claim the capital allowances where the lessor bears the wear and tear burden; the lessor's allowances are ring-fenced against leasing income under section 403, or against income from the particular leased asset in the case of balloon leases under section 404.