Taxes Consolidation Act 1997 section 80A

Taxation of certain short term leases plant and machinery

Section 80A provides an alternative tax treatment for companies that lease machinery or plant with a predictable useful life of no more than eight years, allowing them to be taxed on the accounting profit from such leases rather than under the standard capital allowance rules.

• For finance leases of short-life assets, a company can elect to have its leasing income computed under normal accounting rules instead of tax rules, removing the timing mismatch between lease income and capital allowances.
• For operating leases from 1 January 2010, a company can claim accounting depreciation in place of capital allowances on short-life leased assets, with the income treated as not arising from a trade of leasing.
• Until 31 December 2014, the wear and tear allowance was capped by a group limit formula that restricted relief to the increase in the group's portfolio of short-life leased assets; from 1 January 2015 onwards, the allowance is simply the depreciation or impairment charged to the Profit and Loss Account.
• Two companies are members of a group if one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company, and a claim must be made by the self-assessment filing date for the relevant accounting period.