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HMRC internal manual

Business Leasing Manual

Taxation of leases that are not long funding leases: leasing of fixtures: introduction

Special problems arise in the case of fixtures which count as plant or machinery for capital allowances purposes. As a matter of general law it is not possible for a fixture to be leased by anyone other than the freeholder. This is because an asset is leased when the owner (the lessor) hires it out to the user but does not transfer title. A fixture will normally belong to the freeholder of the real property to which it is attached and the freeholder will not normally be the finance lessor.

Nevertheless, the capital allowances fixtures code contemplates that a lease of a fixture may exist for capital allowances purposes where the lessor does not own the fixture (often referred to as a ‘deemed lease’) - see BLM34010.