CA23782 - Plant & Machinery Allowances (PMA): Long-life assets: Aircraft purchases before 1 July 2014 not within agreement
Note: CA23781 and CA23782 apply only to aircraft purchased before 1 July 2014. CA23783 applies to aircraft purchased on or after 1 July 2014.
You should deal with any claim for capital allowances on a jet aircraft not brought into an arrangement (CA23781) in the light of its particular facts, starting with the presumption that the aircraft will normally be a long-life asset. This is how you should deal with particular types of aircraft.
These guidelines run for the same period as the agreement with BATA (CA23781).
Regional jets
The British Air Transport Association (BATA) agreement covers jet airliners with a seating capacity of 60 seats or more. There is a new class of jet aircraft entering service with airlines that will have fewer than 60 seats. These are commonly known as regional jets. Some later variants of these new types of aircraft will automatically fall within the BATA agreement as their seating configuration will exceed 60 seats. Following further discussions with the airlines, HM Revenue & Customs will accept, in relation to irrevocable contracts entered into on or before 31 December 2008, that regional jets with less than 60 seats operated by commercial airlines are not long-life assets.
Turbo-prop airliners with a maximum take-off weight over 5700kgs operated by commercial airlines
These aircraft have tended to survive only in a limited range of uses and are in part being replaced by the regional jets referred to above. Although in the past, some of these airliners have lasted more than 25 years, the change in the market and the move towards regional jets does suggest that those acquired since the start of the long-life asset rules are unlikely to have a life expectancy of more than 25 years in commercial use. You should accept that they are not long-life assets and qualify in full for the main rate of plant and machinery allowances.
Executive jet aircraft
In normal single corporate ownership these aircraft will, in general, last well over 25 years, although this is very dependent on the particular pattern of use. There is a new development, particularly noticeable in the United States but beginning to be seen in the UK, of fractional or shared ownership of corporate jets, as well as a growing number of companies operating corporate jet services as a business for a variety of users. Accept that where annual usage is above 600 flying hours the aircraft can be treated in the same way as those within the BATA agreement, namely 50:50 assets. These assets are capable of refurbishment and often are upgraded to prolong their lives over the 25-year period. Below 600 flying hours, the life cycle of the aircraft is likely to exceed 25 years without such major refurbishment and you should approach claims on the basis that these are long-life assets attracting allowances in the special rate pool.
Fixed wing turboprops/piston driven aircraft in excess of 2730 kilograms maximum take-off weight
In general these smaller aircraft are not subject to major refurbishment of components that might be regarded as separate assets under FRS15. This class embraces many types of aircraft in a wide variety of uses. Accept that where they are flown for more than 600 hours per annum they will not be long-life assets. This will generally mean that aircraft used commercially, for example by flying schools, will attract the writing-down allowances in the main pool. For aircraft that are used at an annual rate of below 600 hours per annum, the evidence is that they will last more than 25 years and you should approach claims on the basis that they are long-life assets qualifying for the writing-down allowances in the special rate pool.
Fixed wing aircraft below 2730 kilograms maximum take-off weight
These small aircraft are sometimes used in business but more often in private use. Patterns of operation vary enormously but there is little evidence to suggest that the life expectancy is easily predictable at the outset of the aircraft’s life. Accept that they are not long-life assets and are thus entitled to the rate of writing-down allowance for the main pool.
Helicopters
Accept that helicopters:
- in use for in excess of 1,000 hours per annum, or
- in use for more than 600 hours with 2,000 or more landings per annum, or
- which have a maximum take-off weight of less than 650kgs,
will not last for 25 years and will attract the rate of writing-down allowance for the main pool. For those in less intensive use below that figure you should approach any claims on the basis that the assets will only attract the rate for the special rate pool.