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HMRC internal manual

Business Leasing Manual

Defining long funding leases: funding leases that are not long funding leases: short leases: excluded leases: CAA01/S70R

As a general rule, plant or machinery that is leased with other assets may be the subject of a derived lease (see BLM20305 onwards) and so potentially within the scope of the rules for taxing long funding leases.

However, where plant or machinery is leased with the land under a mixed lease, a derived lease of plant or machinery is not a long funding lease where the plant or machinery is

  • fixed to or otherwise installed in or on the land which must include a building, and is background plant or machinery, BLM21310 onwards, and
  • the leases are not disqualified by virtue of CAA01/S70S, BLM21500

This is because CAA01/S70R provides that such a lease is an excluded lease of background plant or machinery for a building, and such leases cannot be long funding leases, BLM20105.