Following the extension to allow Landlords to claim the new Super-deduction, we thought it worth talking about LONG FUNDING LEASES (LFL), which can also mean a lessor is precluded from claiming capital allowances.
Where a long funding lease is in place, the capital allowances treatment is that the lessor, the legal owner of the plant and machinery, is essentially lending money to the lessee, the person using the P&M, to enable the lessee to buy the plant and machinery.
The most important element of the rules is that, provided certain conditions are met, capital allowances are available to the lessee rather than the lessor.
However, there are extensive exceptions to the long funding lease rules, notably affecting fixtures and other plant included in, or sold with, property. To find out more about how LFL may affect your claim read our article here.