Capital Allowances Act 2001

Basic terms U.K.

105 “Leasing”, “overseas leasing” etc. U.K.

(1) In this Chapter—

(a) “leasing” includes letting a ship or aircraft on charter or letting any other asset on hire, and

(b) references to a lease include a sub-lease (and references to a lessor or lessee are to be read accordingly).

(2) Plant or machinery is used for overseas leasing if it is used for the purpose of being leased to a person who—

(a) is not resident in the United Kingdom, and

(b) does not use the plant or machinery exclusively for earning profits chargeable to tax.

[F1 (2A) In determining whether plant or machinery is used for overseas leasing, no account shall be taken of any lease finalised, within the meaning of Part 4 of Schedule 8 to [F2 FA] 2006, on or after 1st April 2006.]

(3) In this Chapter “profits chargeable to tax”—

(a) includes profits chargeable under [F3 section 1313(2) of CTA 2009] (profits from exploration and exploitation of the seabed etc.), but

(b) excludes profits arising to a person who, under double taxation arrangements, is afforded or is entitled to claim any relief from the tax chargeable on those profits.

(4) “Double taxation arrangements” means arrangements [F4 which have effect under section 2(1) of the Taxation (International and Other Provisions) Act 2010 (double taxation relief by agreement with territories outside the United Kingdom)].

(5) “Protected leasing” of plant or machinery means—

(a) short-term leasing of the plant or machinery (as defined in section 121), or

(b) if the plant or machinery is a ship, aircraft or transport container, the use of the ship, aircraft or transport container for a qualifying purpose under section 123 or 124 (letting on charter to UK resident etc.).

(6) In this Chapter “qualifying activity” includes (subject to any provision to the contrary) any activity listed in section 15(1) even if any profits or gains from it are not chargeable to tax.

Textual Amendments

F1 S. 105(2A) inserted (19.7.2006) by Finance Act 2006 (c. 25), Sch. 9 para. 13(2)

F2 Word in s. 105(2A) substituted (21.7.2009) by Finance Act 2009 (c. 10), s. 126(5)(a)

F3 Words in s. 105(3)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 483 (with Sch. 2 Pts. 1, 2)

F4 Words in s. 105(4) substituted (1.4.2010) (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 8 para. 58 (with Sch. 9 paras. 1-9, 22)

106 The designated period U.K.

(1) Subject to subsection (2), the designated period, in relation to expenditure incurred by a person on the provision of plant or machinery, is the period of 10 years beginning with the date on which he first brought the plant or machinery into use.

(2) If the person who incurred the expenditure ceases to own the plant or machinery before the end of the 10 year period, the designated period ends on the date when he ceases to own it.

(3) For the purposes of subsection (2), a person is to be treated as continuing to own plant or machinery so long as it is owned by a person who—

(a) is connected with him, or

(b) acquired it from him as a result of one or more disposals on the occasion of which, or [F5 each of which there was a change in the persons carrying on the qualifying activity in relation to which Condition A or Condition B was met.]

[F6 (3A) Condition A is that—

(a) at least one person who carried on the qualifying activity immediately before or immediately after the change was within the charge to income tax in respect of that activity, and

(b) at least one person who carried on the qualifying activity before the change continued to carry it on after the change.

(3B) Condition B is that—

(a) the qualifying activity was carried on in partnership both immediately before and immediately after the change,

(b) a company that was within the charge to corporation tax in respect of the activity carried it on immediately before or immediately after the change, and

(c) at least one company which carried the activity on before the change continued to carry it on after the change.]

F7 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F5 Words in s. 106(3)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 484(2) (with Sch. 2 Pts. 1, 2)

F6 S. 106(3A)(3B) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 484(3) (with Sch. 2 Pts. 1, 2)

F7 S. 106(4) repealed (with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5),, Sch. 1 para. 536(3), 3 (with Sch. 2)