CA20040 - Plant and Machinery Allowances (PMA): introduction: special leasing
CAA01/S19 & CAA01/S35
Where plant or machinery is leased out, the leasing is usually part of some other qualifying activity, for instance a trade (which may be a trade of leasing or some wider trade that includes leasing) or a UK property business. Where it is leased out other than in the course of some other qualifying activity, the leasing is described as ‘special leasing’ and is a qualifying activity for PMAs. The qualifying activity starts when the asset is leased out and ends when the lessor permanently ceases to lease the asset out.
Each item of plant or machinery that is the subject of special leasing is treated as a separate qualifying activity. If the taxpayer begins to lease the same asset after a permanent discontinuance, that is also treated as a separate qualifying activity of special leasing. PMAs are calculated and given separately on each special leasing activity.
Example
Jason is a professional musician. He owns a yacht for the private use of himself, family and friends, which he sometimes charters out. The profits from chartering out the yacht are taxed as miscellaneous income (ITTOIA/Part 5 (from S574)). The chartering out of the yacht is a special leasing. PMA on the yacht are calculated separately from ones relating to his profession as a musician.
Jason buys a powerboat, which he also leases out occasionally. PMAs are calculated separately on the yacht and the powerboat.
Special leasing - life assurance company
You should treat the hiring out by a company carrying on life assurance business of an investment asset other than in the course of an ordinary property business or an overseas property business as special leasing.
Special leasing - exclusion of assets let for use in a dwelling house
Expenditure incurred on the provision of plant or machinery for use in a dwelling-house is excluded from PMAs if the qualifying activity is special leasing (or a UK or overseas property business), see CA23060.